Forex Strategy: NZD/USD Dark Cloud Cover Suggests Correction
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- NZD/USD Technical Strategy: Pending short
- Dark Cloud cover candle pattern warning of declines
- Trend shift needed before offering bearish bias
The NZD/USD broke above critical long-term range resistance at 0.8400 before reversing in intraday trade. A Dark Cloud Cover candlestick pattern on the hourly chart is suggesting a correction may play out from here. However, caution should be exercised in trying to trade a reversal. This comes as the pair seemingly shrugged off an earlier warning signal of a decline post a Hanging Man formation near 0.8360.
Buyers appear to be emerging at support-turned-resistance at 0.8385. A break below would open up the 38.2% Fib Retracement level near 0.8360. It should also be noted that while longer timeframes like the daily suggest a range-bound environment for the Kiwi, the hourly is indicating an intact uptrend which would need to change before offering a bearish bias.
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Hourly 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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