Forex: NZD/USD Technical Analysis – Critical Trend Line Broken
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- NZD/USD Technical Strategy: Flat
- Support: 0.8547 (23.6% Fib ret.), 0.8452 (38.2% Fib ret.)
- Resistance: 0.8221 (trend line), 0.8675 (Apr’13 high)
New Zealand Dollar turned lower as expected against the US Dollar having completed a Bearish Engulfing candlestick pattern below resistance at the April 2013 high (0.8675). A break below rising trend line support set from early February has exposed the 23.6% Fibonacci retracement at 0.8547, with a further push through this barrier targeting the 38.2% level at 0.8452. Trend line support-turned-resistance is now at 0.8621 aims for 0.8675 anew.
Risk/reward considerations argue against entering short with prices trading in close proximity to relevant support. On the other hand, taking up the long side looks premature absent a defined bullish reversal signal. With that in mind, we will continue to stand aside for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com