News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZX8cS https://t.co/qdrsi61CN8
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2021? Find out from @JohnKicklighter here: https://t.co/1oeXWEsJkb https://t.co/IyQdfq29fz
  • Myth or fact? One thing is for sure, there are a lot of misconceptions about trading. Knowing the difference between common trading myths and the reality is essential to long-term success. Find out about these 'myths' here: https://t.co/EDvQdHfIPm https://t.co/R7pa7DsM8n
  • What are some monetary policies that could affect Gold this quarter? Get your Gold free forecast here: https://t.co/bTXkGN1CIM #DailyFXGuides https://t.co/EhdZpmkzaH
  • Even more remarkable than the record high levels of leverage registered in US equities this past week was the attention it garnered. Paying attention to risk is a threat when markets are this high and the docket as dense as it is this week. My outlook: https://www.dailyfx.com/forex/video/daily_news_report/2021/01/23/Dow-VIX-Tesla-and-Leverage-Reflect-Greater-Risk-to-the-Relentless-Bull-Market.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/KBOJIRPTQe
  • Consolidation or bull flag? A bull flag is a continuation pattern that occurs as a brief pause in the trend following a strong price move higher. Learn how to better spot these formations here: https://t.co/yOEvLjKnct https://t.co/qP2PbS4dsY
  • Are you new to trading? Technical analysis of charts aims to identify patterns and market trends by utilising different forms of technical chart types and other chart functions. Get a refresher on technical analysis or begin building your knowledge here: https://t.co/qV3c7a4YR3 https://t.co/POGWDIkqqz
  • USD hegemony is at risk thanks to changes in the global economy and the long-term consequences of the US-China trade war. Get your market update from @CVecchioFX here: https://t.co/5GO9UrvO4y https://t.co/H76jNJJxU5
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/1TiEWCbJ6t
  • Use this technical analysis pattern recognition skills test to sharpen your knowledge: https://t.co/Qgz89PTxnu https://t.co/fN2mfHgpON
Why Traders Should Be Wary of the Kiwi Head and Shoulders Break

Why Traders Should Be Wary of the Kiwi Head and Shoulders Break

Benjamin Spier, Technical Strategist

Talking Points:

  • NZD/USD falls below the neckline of a head & shoulders pattern
  • A previous head & shoulders pattern failed to show follow through
  • Support remains at .8110

Want to trade with proprietary strategies developed by FXCM? Find out how here.

Many chartists refer to the head and shoulders pattern as one of the most reliable technical indicators, but recent price action should make us wary of the recent head and shoulders pattern seen on the 4-hour chart in NZD/USD trading.

Although the Kiwi/Dollar pair has been consolidating since setting a 2-month low in late November, the pair began an uptrend on the 4-hour chart on December 29, which continued until a new 2-month high was set above .8400. NZD/USD then found support again by the forming neck line slightly above 0.8200, and the pair went on to set a lower high, which constituted the right shoulder of the now visible head and shoulders pattern.

NZD/USD 4-Hour: January 30, 2014

Why_Traders_Should_Be_Weary_of_the_Kiwi_Head_and_Shoulders_Break_body_Picture_3.png, Why Traders Should Be Wary of the Kiwi Head and Shoulders Break

NZD/USD just closed below the neckline at the end of Wednesday’s trading day, and the guidelines of a head and shoulders pattern now predict that the Kiwi will decline the legnth of the distance between the top of the head and the neckline, which is 221 pips and suggestive of a fall to the key .8000 level.

However, if you pullback to a daily timeframe, we see a similar setup in the fall of 2013. The Kiwi posted a clear head and shoulders pattern around a neckline only slightly above the neckline of the more recent pattern. NZD/USD closed below the neckline on November 21, but the reversal to the downside was only about 140 pips instead of the projected 300 pips. The pair failed to close below the resistance turned support horizontal line at .8110 that began in June of 2013.

NZD/USD Daily: January 30, 2014

Why_Traders_Should_Be_Weary_of_the_Kiwi_Head_and_Shoulders_Break_body_Picture_2.png, Why Traders Should Be Wary of the Kiwi Head and Shoulders Break

The range that has continued since then remains in play, and the support at .8110 that stopped the last H&S reversal may also put the breaks on the current downward Kiwi movemet. Furthermore, an upward trendline that began in June of 2010 may now provide support around .8190.

NZD/USD Weekly: January 30, 2014

Why_Traders_Should_Be_Weary_of_the_Kiwi_Head_and_Shoulders_Break_body_Picture_1.png, Why Traders Should Be Wary of the Kiwi Head and Shoulders Break

Therefore, a close below the horizontal line at .8110 may be necessary for traders to look for a completion of the projected reversal of the more recent head and shoulders projected downtrend to .8000. Until then, it is hard to say that the congestion from fall 2013 has ended. Alternatively, resistance to an upward movement in Kiwi may come in by the 3-month high at .8432 or by the yearly high at .8544.

New to Forex? Watch this video

Charts created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to instructor@dailyfx.com .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES