NZD/USD Technical Analysis: Head and Shoulders Bottom Set?
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- NZD/USD Technical Strategy: Flat
- Head and Shoulders Bottom on the Verge of Confirmation, Opening Door for Upswing
- Gains Seen as Corrective, Offering Short Trade Opportunity After Upswing is Exhausted
The New Zealand Dollar may be carving out a bullish Head and Shoulders bottom chart pattern, hinting a larger recovery against the currency’s US counterpart is ahead. Prices are probing monthly highs after finding support below the 0.65 figure but confirmation of bottom is pending for now.
A daily close above 0.6585, the 23.6% Fibonacci expansion and de-facto neckline for the Head and Shoulders setup, initially exposes the next upside barrier at 0.6681, the 38.2% level. Looking a bit further ahead, the implied measured objective of the H&S pattern is 0.6741, assuming the setup is validated. Alternatively, a move below horizontal pivot support at 0.6499 opens the door for a test of the November 18 low at 0.6429.
While the H&S setup carries near-term bullish implications, the prevailing long-term trajectory has favored the downside since July 2014. As such, we will treat the pattern’s confirmation as the start of a corrective advance and aim to find selling opportunities after the move is exhausted rather than seek to enter long.
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