NZD/USD Technical Analysis – Opting to Wait for Short Setup
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- NZD/USD Technical Strategy: Flat
- Support: 0.8558 (trend line), 0.8513 (Oct 22 close)
- Resistance: 0.8656 (14.6% Fib exp.), 0.8718 (23.6% Fib exp.)
The New Zealand turned lower against its US counterpart as expected after completing a bearish Dark Cloud Cover candlestick pattern. A recovery from rising trend line support in play since mid-March sees initial resistance at 0.8656, the 14.6% Fibonacci expansion. A break above that on a daily closing basis exposes the 23.6% level at 0.8718. Alternatively, a move below the trend line (now at 0.8558) aims for the October 22 close at 0.8513.
Risk/reward conditions allow for a long position but we will tactically opt against the trade. Today’s RBNZ monetary policy statement seemed to suggest that the level of the exchange rate will be considered in setting future policy, which presumably suggests that appreciation will undermine the case for further rate hikes. That undermines policy support for the Kiwi and we prefer to wait for a viable selling opportunity rather than betting on the upside.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com