NZD/USD Forecast May 1, 2014, Technical Analysis

Of the NZD/USD pair initially fell during the session on Wednesday, but found enough support at the 0.8550 level to turn things back around and go higher. Because of this, we feel that the market will continue to grind even higher than current levels, and that a move above the 0.8650 level signals and we will in fact trying to get to the 0.8750 level, and then ultimately the 0.90 level. That is a longer-term call of ours, but we do think that ultimately this market will in fact continue to go higher over time. After all, the New Zealand dollar was be down rather drastically last year, probably a bit too much.

Any pullback at this point time should be a buying opportunity, especially on short-term supportive candles. We believe that the 0.85 level is the beginning of the “floor”, and as a result the market is probably well supported even lower, all the way down to the 0.84 level. Any supportive candle in that region should attract a lot of buyers and massive buying pressure. It really isn’t until we get below the 0.84 level that we can consider selling, and we do not expect to see that happen anytime soon. After all, the 0.85 level has been rock solid as support.

Going forward, we think that the commodity markets will of course have an effect on the market, but don’t always have a one to one correlation so to speak. Because of this, you have to gauge in the general “attitude” of the commodity markets as well as other risk related financial instruments. Futures markets, commodity markets, and stock market indices all can come into play when measuring this, and as a result you have to more or less play the correlation very loosely. Remember that the New Zealand dollar is a less liquid currency, so its moves can be rather drastic. All things being equal though, we do believe that this market will continue to have an upward bias, and offer buying opportunities on short-term pullbacks as well.