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Forex Strategy: NZD/USD Bearish Engulfing Pattern Puts Gains Into Question

Forex Strategy: NZD/USD Bearish Engulfing Pattern Puts Gains Into Question

David de Ferranti, Currency Analyst

Talking Points

  • NZD/USD Technical Strategy: Sidelines Preferred
  • Bearish engulfing pattern on the daily warns of declines
  • Given the short-term uptrend caution suggested when looking at shorts

The Kiwi’s bull-run has been halted at the 0.8635 level of resistance which has resulted in the emergence of a Bearish Engulfing candlestick pattern on the daily. While this may be warning of a potential reversal, caution is suggested when looking at shorting the NZD/USD, given the pair remains in a short-term uptrend signaled by prices being above the 20 SMA.

NZD/USD: Another Reversal Signal Emerges

Forex-Strategy-NZDUSD-Bearish-Engulfing-Pattern-Puts-Gains-Into-Question_body_Picture_2.png, Forex Strategy: NZD/USD Bearish Engulfing Pattern Puts Gains Into Question

Daily Chart - Created Using FXCM Marketscope 2.0

The four hour chart reveals some intraday support around the 0.8510 level yet the potential for a bounce may prove limited in the absence of a bullish reversal signal.

NZD/USD: Finds Support But Bounce May Be Limited

Forex-Strategy-NZDUSD-Bearish-Engulfing-Pattern-Puts-Gains-Into-Question_body_Picture_1.png, Forex Strategy: NZD/USD Bearish Engulfing Pattern Puts Gains Into Question

Four Hour Chart - Created Using FXCM Marketscope 2.0

By David de Ferranti, Market Analyst, FXCM

Follow David on Twitter: @Davidde

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

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