NZD/USD Technical Analysis: Short Position Setup Pending
To receive Ilya's analysis directly via email, please SIGN UP HERE
- NZD/USD Technical Strategy: Flat
- New Zealand Dollar Drops for Second Day, Losses Grip on 0.66 Figure vs. US Namesake
- Flag Pattern Invalidation, Better Risk/Reward Parameters Sought to Trigger Short Trade
The New Zealand Dollar declined for a second consecutive day after recoiling from chart resistance, edging below the 0.66 figure against its US namesake. Sellers have fallen short of invalidating the outlines of a would-be Flag formation, a setup that could be hinting at brewing continuation of the rally from late-September lows.
Near-term support is in the 0.6540-77 area, marked by the 23.6% Fibonacci expansion and the Flag floor. A daily close below this barrier initially exposes the 38.2% level at 0.6320. Alternatively, move back above the 14.6% Fib at 0.6676 – now acting as near-term resistance – opens the door for a challenge of the Flag pattern’s upper boundary at 0.6737.
Prices are too close to near-term support to justify entering a short position from a risk/reward perspective. Furthermore, the Flag setup ought to be convincingly unwound to establish reasonable confidence in the near-term downside scenario. With that in mind, we will remain on the sidelines for the time being.
Losing Money Trading Forex? This Might Be Why.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.