NZD/USD forecast for the week of August 31, 2015, Technical Analysis

The NZD/USD pair fell hard during the course of the week but found enough support just above the 0.60 level to turn things back around and form a massive hammer. This massive hammer of course is a very bullish sign, and as a result it more than likely signifies that this market is going to struggle to find sellers for any real length of time. In fact, we have to begin to wonder whether or not the 0.65 level is an essentially going to be the beginning of the end of the downtrend. This could be the beginning of the “floor” in this particular currency pair. With this, we have put an orange dashed line on this chart that signifies when we feel the market may try to break out to the upside for the longer term.

That does not mean that it’s going to be an easy turn around, but it does suggest a perhaps it could be coming. As far as long-term trades are concerned, it’s going to be almost impossible to short this market until we break down below the bottom of the hammer, which of course would show extreme weakness. We could on the other hand look for a resistive candle above, but at this point in time we have to wait to see if that comes.

Keep in mind that the New Zealand dollar is highly influenced by Asian economies in general, and the Chinese have recently gone on with extreme quantitative easing. This should be a boost for the economy in general, and perhaps even commodities in Asia. If we get that, that should be good for the New Zealand dollar as so much of the New Zealand goods that are exported end up in places like China and Southeast Asia. With this, we think the market may be turning around but will have to be very patient as the one thing we can probably count on is volatility more than anything else. Small trading positions are probably best at this point in time.