NZD/USD forecast for the week of January 4, 2016, Technical Analysis

The NZD/USD pair tried to rally during the course of the week but as you can see struggled at the 0.69 level. This is an area that has been resistive previously, and the fact that we formed a shooting star here of course is intriguing. However, the one thing that I am looking at in this chart is the fact that the most recent low is much higher than the one previous to it. In a sense, you could make an argument for some type of ascending triangle, but the one thing that I do think is relatively obvious in this pair is the fact that the 0.69 level is going to be very important.

Because of this, we can get above the 0.69 level, the market should then reach towards the 0.70 handle, and then the 0.75 level. The New Zealand dollar of course is going to continue to struggle in general as long as commodity markets do, so we will have to keep an eye on those as well. The New Zealand dollar is essentially a “barometer” on the overall risk appetitive futures traders, as it is a commodity driven economy.

If we do fall from here, it’s not likely that we are going to break down drastically. The 0.65 level should be rather supportive, so even a break down below the bottom of the shooting star isn’t quite enough to get us aggressively short, rather preferring to trade smaller than usual positions due to the fact that we will more than likely have quite a bit of volatility.

The first couple of weeks will probably be fairly choppy for the year, but once the liquidity comes back completely, we might be able to get some type of clear signal as to the overall attitude of this market going forward. The one thing that I do now is that the US dollar is highly favored against most currencies, so that of course is going to continue to put a bit of a drag on the air.