Forex: NZD/USD Technical Analysis – A Double Top in the Works?
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- NZD/USD Technical Strategy: Flat
- Support: 0.8513 (Oct 22 close), 0.8452 (38.2% Fib ret.)
- Resistance: 0.8662 (trend line), 0.8675 (Apr’13 high)
New Zealand Dollar turned lower as expected against its US namesake after prices completed a Bearish Engulfing candlestick pattern below resistance at the April 2013 high (0.8675). The pair has since bounced from support at 0.8513, the October 22 close, and is now retesting 0.8675 anew. A break above this barrier initially targets the 38.2% Fibonacci expansion at 0.8762. Negative RSI divergence continues to warn of ebbing upside momentum however, pointing to the possibility of a Double Top in the works. Turning lower from here and pushing below 0.8513 will clear a path for a test of the 38.2% Fib retracement at 0.8452. We will stand aside for now, waiting for confirmation of reversal to enter short.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com