Consolidation or Breakdown in NZD/USD?
- Kiwi stuck between two trendlines
- Possible double top setting up on daily chart
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
A quick glance at the NZD/USD daily chart will reveal that the exchange rate has been beholden to a set of trendlines over the past couple of weeks. On the upside, the line connecting the October and January highs is currently at .7700 and has proven to be strong resistance over the past couple of weeks on a closing basis. The lower trendline now just under .7600 connects the March and mid-April lows and has been a solid area of support these past few days. With these lines getting closer to each other each trading day we can only assume that a directional break of some sort is coming. Wednesday’s reversal occurred during a cycle turn window and the price action over the past few weeks has set up a pretty clear potential double top. All things considered this would seem to favor a downside resolution. A daily close under .7590 or a break of the double top trigger at .7540 should confirm that a move lower of some importance is underway. A daily settlement over .7700, on the other hand, would set the stage for a more important push higher in the Kiwi.
To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.
NZD/USD Daily Chart: May 1, 2015
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: .7700 (Trendline), .7740 (April high)
Support: .7540 (Late April low) .7520 (Fibonacci)
Strategy: Sell NZD/USD
Entry: Sell NZD/USD on a weekly close below .7590
Stop: Daily close above .7700
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.