NZDUSD: Passing on Short Trade Setup
Strategy: Pending Short
NZDUSD completed a bearish Three Outside Down candlestick pattern that broke through major support in the 0.8232-0.8241 area marked by the 23.6% Fibonacci retracement and the October 28 swing high. Negative RSI divergence reinforces the case for a downward reversal. With that in mind, risk/reward considerations argue against entering short here. Indeed, near-term support (and first would-be target) lines up at 0.8084, the 38.2% Fib, while the lowest reasonable stop-loss level is the 0.84 figure. With that in mind, we will begrudgingly remain on the sidelines, waiting for a more attractive setup to present itself.
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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