Forex Strategy: NZD/USD Shooting Star Forming Suggesting Correction
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- NZD/USD Technical Strategy: Shooting Star Confirmation To Offer Bearish Bias
- Inverted Hammer formation on the daily has resulted in extended gains
- Next 24 hours to prove critical as prices test the critical 0.8390 level in intraday trade
The NZD/USD has extended its recent gains following the formation of an Inverted Hammer candlestick pattern at 0.8060. However, the upside momentum appears to be stalling in intraday trade today as the pair faltered at critical resistance at the 0.8390 mark, which has suppressed gains since Nov 2013.
The daily candle appears to be forming a Shooting Star pattern in early trade, which may be hinting at a correction. Given the risks inherit in trying to pick reversals, the close of the daily bar and confirmation from a successive down day is required before offering a bearish bias.
It is also noteworthy that the DailyFX Speculative Sentiment Index continues to grow more negative, with the highest open interest for shorts on record. As a contrarian indicator, this suggests gains may continue.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by David de Ferranti, Market Analyst, FXCM
Contact and follow David on Twitter: @Davidde
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