The NZD/USD pair is one of my favorite pairs to trade. One of the main reasons of course is the fact that it not only follows commodities, but it is also one of the least liquid of the major markets. Because of this, it will often outperform or underperform the other commodity currencies. For example, on a day that the Australian dollar moves 100 pips, it is quite common to see the New Zealand dollar move 150.
This is part of what has caught my attention, the fact that the New Zealand dollar isn't necessarily moving with the Australian dollar. This is pretty rare, although it does happen time to time. What I find interesting is the fact that the Australian dollar looks absolutely horrible, while the New Zealand dollar actually looks like it simply consolidating. True, I can make a case for the Australian dollar consolidating between 1.02 and 1.06, but I cannot help but notice how much weaker the Aussie looks in general.
It is because of this that I believe that the New Zealand dollar is actually trying to wind up for another bullish run. Looking at this chart, I can make a very easy case for consolidation between 0.83 and 0.8450 or so. Because of this, I think that a break of the highest from the Monday session should signal higher rates.
I'm not married to this position
This is the type of position that can earn you a quick 100 pips, but whether or not it can become a longer-term trade is a completely different question. I do see that above the 0.85 level we have massive bullishness in this market just waiting happen, but it is also an area that has managed to hold off the buyers or some time now. Because of this, I will probably be fairly quick to take profits on this move if it happens, and then reenter if we do manage to close above the 0.85 level. Odds are the consolidation will continue, and as a result I'm very content to pick up with the market is offering.
