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NZD/USD Technical Analysis: Digesting Losses at Monthly Low

NZD/USD Technical Analysis: Digesting Losses at Monthly Low

Ilya Spivak,

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar Pauses to Digest Losses After Sliding to 2-Month Low vs. US Counterpart
  • Waiting to Establish Better-Defined Risk/Reward Parameters to Initiate Short Position

The New Zealand Dollar paused to consolidate after slumping to the weakest level in a month against its US counterpart in the aftermath of last week’s strong US jobs data. Prices have now erased more than half of the advance late-September lows.

From here, a daily close below the 61.8% Fibonacci retracement at 0.6488 sees the next key downside barrier at 0.6391, the 76.4% level. Alternatively, a move back above the 50% Fib at 0.6566 – now recast as resistance – opens the way for a retest of the 0.6618-44 zone marked by the October 13 low and the 38.2% retracement.

Tactical considerations argue against taking a trade at current levels. First, the available trading range is too narrow relative to ATR. Second, prices are too close to support to justify entering short from a risk/reward perspective. We will remain on the sidelines for now, waiting for the pair to offer a better-defined opportunity.

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