NZD/USD Technical Analysis: Candle Setup Hints at Topping
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- NZD/USD Technical Strategy: Flat
- NZ Dollar Rally Falls Short of Testing 0.69 Figure, Carves Out Bearish Candle Pattern
- Risk/Reward Parameters, Absence of Confirmation Argue Against Taking Short Position
The New Zealand Dollar put in a bearish Dark Cloud Cover candlestick pattern, hinting that a top against its US namesake may be taking shape. Prices stalled after issuing the largest two-day advance in seven months, falling just shy of testing the 0.69 figure.
Near-term support is at 0.6740, the 23.6% Fibonacci retracement. A break below that on a daily closing basis clearing the way for a challenge of the 0.6620-44 area, marked by trend line resistance-turned-support and the 38.2% level. Alternatively, a move back above the 14.6% Fib at 0.6800 opening the door for a test of the 14.6% Fib expansion at 0.6879.
Prices are wedged too closely between near-term support and resistance to justify taking a trade at current levels. Furthermore, confirmation of reversal is absent for now absent a move overturning the series of higher highs and lows in play since late September. With that in mind, we will remain on the sidelines for the time being.
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