NZD/USD Technical Analysis: Test of Long-Term Trend Ahead?
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- NZD/USD Technical Strategy: Flat
- Kiwi Trying to Complete Bullish Flag Pattern, Resume Recovery Against US Dollar
- Upswing After Confirmed Breakout May Yield Short Entry on Long-Term Trend Test
The New Zealand Dollar may be carving out a Flag continuation pattern which, if confirmed, would point to resumption of the advance from late-September lows against the currency’s US counterpart. Another medium-term thrust higher may put prices on a collision course with resistance guiding the longer-term down trend initiated in July 2014.
Flag top resistance is now at 0.6758, with a break above that on a daily closing basis seeing the next key upside barrier at 0.6896, the October 15 high. Alternatively, a reversal below the 38.2% Fibonacci retracement at 0.6644 opens the door for a challenge of the 0.6566-0.6603 area, marked by the Flag floor and the 50% Fib level.
Risk/reward parameters are skewed against taking a trade at current levels. On one hand, prices’ proximity to resistance and the absence of bullish breakout confirmation warn against entering long. On the other, taking up the short side seems premature without a defined bearish reversal signal. We will remain on the sidelines for the time being until something more attractive presents itself.
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