NZD/USD Technical Analysis: Short Position Setup Pending
05 Nov 2015 08:36, GMTTo receive Ilya's analysis directly via email, please SIGN UP HERE
Talking Points:
- 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.
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