Howdy Folks,

Tonight I’m pondering the future of kiwi / dollar. I’m confident kiwis are tasty and one of my favorite fruits, but I’m not as confident on the future of NZD/USD. The fruit flavored currency caught another rally today after better than expected business confidence data and a strong equity market. Unfortunately for Kiwi there are no further fundamental reports scheduled this week which could leave it open to event risk from the United States. The demand for kiwi has been impressive. The currency has gained nearly 2,500 pips over seven straight months without a pause. I’m curious to see if kiwi builds a quiet top around $0.74, breaks it quickly or is rejected quickly. The $0.74 handle looks like pretty decent resistance on the monthly chart.

I’m starting to become slightly bias that longs at this price level may not be the greatest idea in the world. Consider what might happen if the market sells off from either the $0.74 or $0.73 levels; do you really want to step in front of what could be a hefty amount of longs unwinding? It is something to consider when NZD/USD is sitting precariously on top of a 2,500 pip, seven month long rally. On the other hand last week closed with an inside day pattern on the weekly chart. This could be a sign NZD/USD is preparing a volatility break higher. Until I see $0.73 fall and provide support convincingly the inside day could be a break play in either direction.

Just my $0.02 for the night.

Best of luck,

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.