Forex Strategy: NZD/USD Extends Declines Post Doji Formation
- NZD/USD Technical Strategy: Sidelines Preferred
- Doji signaled indecision near key 0.8700 handle
- Break below 0.8500 opens declines to 0.8400
The NZD/USD has conducted an about-face following several failed attempts at a breakout above its 2013 high near 0.8700. The Doji noted in recent candlesticks reports helped signal fading momentum amongst the bulls. While sellers briefly paused at the 0.8600 handle the pair was quick to resume its declines in Asian trading today. A break below the next psychologically-significant level at 0.8500 would likely offer a downside target near 0.8400.
It should be noted that the monthly US NFPreport due in the coming hours is likely to spark significant volatility for the Kiwi which could negate technical signals offered. Details available on the economic calendar here.
NZD/USD: Prices Reverse Following Doji Formation
Daily Chart - Created Using FXCM Marketscope 2.0
Drilling down to examine intraday price action; a Shooting Star formation near 0.8550 as prompted a sharp turn for the Kiwi during early European trading. A test of 0.8510 looks likely in the hours ahead.
NZD/USD: Signs of A Bounce Absent
Four Hour Chart - Created Using FXCM Marketscope 2.0
Finally, taking some broader context from the weekly chart; a Bearish Engulfing pattern appears to be forming which could warn of a more significant decline for NZD/USD. However, the second candle has yet to close and receive confirmation from a second down period to be validated.
NZD/USD: Bearish Engulfing Pattern Forming
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.