NZD/USD Technical Analysis: Topping Confirmation Pending
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- NZD/USD Technical Strategy: Flat
- Prices Resume Upward Push, Move to Challenge 17-Month Down Trend Resistance
- Negative RSI Divergence Hints at Reversal But Confirmation Needed to Trigger Trade
The New Zealand Dollar resumed the advance against its US namesake after finding support below the 0.67 figure, rising to the highest level in two months. The currency is now within striking distance of trend line resistance capping the upside since mid-July 2014, with negative RSI divergence warning that upside momentum may be fading.
Near-term support is at 0.6777, the 23.6% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a test of the 38.2% Fib retracement at 0.6680. Alternatively, a push above the 0.6836-47 area marked by the 38.2% expansion and the aforementioned trend line paves the way for a challenge of the 0.6884-97 zone (50% expansion, October 15 high).
We are keen to enter short NZD/USD in line with the longer-term down trend. However, the absence of a discrete reversal signal warns that pulling the trigger may be premature for now. With that in mind, we will remain on the sidelines for the time being and wait for greater clarity to emerge.
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