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NZDUSD Scalps Target Key Reversal Off October High- Bearish Sub 8460

By , Currency Strategist
24 October 2013 20:13 GMT

Talking Points

  • NZDUSD reverses off multi-year trendline
  • Near-term price action and RSI divergence shifts focus lower
  • Bearish below 8460- Short scalp conviction below 8300

NZDUSD Daily Chart

Forex_NZDUSD_Scalps_Target_Key_Reversal_Off_October_High-_Bearish_Sub_8460_body_Picture_2.png, NZDUSD Scalps Target Key Reversal Off October High- Bearish Sub 8460

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • NZDUSD reverses off former channel support dating back to July 2012
  • Daily RSI divergence identified on September & October highs
  • This week the pair pushed into fresh 5-month highs and then took out the weekly low = Bearish
  • Interim support 8340 (October opening range high & 23.6% retracement)
  • Key support range 8180-8214- Break to offer short conviction
  • Resistance 8435 – Breach above 8460/63 invalidation scalp bias
  • Breach above monthly high targets key resistance at 8634 & 8674
  • Momentum short trigger break pending
  • Key Events Ahead: US Durable Goods & Wholesale InventoriesTomorrow

NZDUSD Scalp Chart

Forex_NZDUSD_Scalps_Target_Key_Reversal_Off_October_High-_Bearish_Sub_8460_body_Picture_1.png, NZDUSD Scalps Target Key Reversal Off October High- Bearish Sub 8460

Notes: The break below the weekly opening range low on the 23rd after making fresh monthly highs immediately shifted our focus lower on the Kiwi in the near-term. The pair has now failed to breach above former trendline support dating back to July of 2012 for five consecutive days with daily RSI divergence and a turnover in the oscillator suggesting an interim high may be in place.

The decline has now completed a 61.8% extension off the monthly highs and 30min RSI divergence suggests a bounce higher in the near-term should offer more favorable short entries. We will continue to eye momentum triggers for entry while noting that a topside break of the descending channel formation off the monthly highs would likely be a larger interruption in this particular setup. Note that we have been playing Kiwi weakness by way of the EUR/NZD setup highlighted in Tuesday’s report, which looks much cleaner from a technical standpoint. Although a similar setup can be observed on the AUDUSD, the magnitude of the shift in momentum continues to favor the Kiwi for now until Aussie price action offers further clarity on the reversal off key technical resistance at 9714/40.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Resistance Target 1

30min

8360/67

50% Retrace & 23.6% Fib Ext

Resistance Target 2

30min

8408

38.2% Retracement

Resistance Target 3

30min

8435

September High / Pivot

Bearish Invalidation

Daily / 30min

8457/63

23.6% & 61.8% Retrace / 38.2% Ext

Break Target 1

Daily / 30min

8495 - 8500

1.618% Fib Ext / Psychological Level

Break Target 2

Daily / 30min

8543/46

Monthly High / TL Resistance / 50% Ext

Break Target 3

Daily / 30min

8564

88.6% Retracements

Break Target 4

30min

8585

Late April Swing High

Break Target 4

Daily / 30min

8630/34

61.8% Ext / 2013 Close High / 2011 TL Res

Support Target 1

Daily / 30min

8330/40

23.6% & 61.8% Retrace / 61.8% Ext

Bullish Invalidation

Daily / 30min

8298 / 8300

78.6% Ext / TL Support

Break Target 1

30min

8257/67

78.6% Retrace / 100% Fib Ext

Break Target 2

30min

8230

10/10 Low / Soft Support

Break Target 3

Daily / 30min

8180 / 8214

50% & 38.2% Retrace / 200DMA / Oct Low

Break Target 4

Daily / 30min

8160

August High / Multi-Month Pivot

Break Target 5

30min

8142

1.61.8% Fib Extension

Average True Range

Daily

88

Profit Targets 20-22pips

Other Setups in Play:

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---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

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24 October 2013 20:13 GMT