NZD/USD Technical Analysis: Holding Short Trade for Now

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Talking Points:

• NZD/USD Technical Strategy: Short at 0.7783
• Support: 0.7420, 0.7275, 0.7130
• Resistance:0.7520, 0.7599, 0.7680

The New Zealand Dollar declined as expected against its US counterpart after putting in a bearish Evening Star candlestick pattern. Near-term support is at 0.7420, the 38.2% Fibonacci expansion, with a break below that on a daily closing basis exposing the 38.2% level at 0.7275. The appearance of a Bullish Engulfing pattern warns a bounce may be in the works however. A reversal above channel floor support-turned-resistance at 0.7520 clears the way for a test of the 23.6% Fib at 0.7599.

We sold NZDUSD at 0.7783 and have subsequently booked profits on half of the position. The rest of the trade remains open to capture any further downside momentum. The stop-loss has been revised to the breakeven level (0.7783).

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Daily Chart - Created Using FXCM Marketscope

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com