NZD/USD Forecast December 16, 2011, Technical Analysis

NZD/USD bounced on Thursday as it was left sitting at the all-important 0.75 level from its current fall. The level is the start of a gap, and while the gap hasn’t been filled, the top of a gap is often supportive as well. Add this to the 0.75 large round number and a bounce was probably always going to happen. However, the directional bias should still be down as the world continues to shun risk taking currently, and the Kiwi is so tied to the commodity trade.

The breaking lower of this pair would be expected, but we want to see the gap not only get closed, but see the pair trade lower than the bottom of that gap in order to add short positions at this point in time. We won’t buy this pair, but would be interested in selling any weakness that appears nearer to the 0.73 level.