NZD/USD Technical Analysis: Short Trade Setup Established
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- NZD/USD Technical Strategy: Flat
- Kiwi Dollar Resumes Decline, Breaks Support to Expose November Swing Bottom
- Short Entry Order Established Just Below 0.66 to Satisfy Risk/Reward Parameters
The New Zealand resumed the decline against its US counterpart after a brief one-day respite, dropping to the lowest level in two months. Sellers now look poised to challenge November’s swing low, where the Kiwi’s previous attempt to build downside momentum stalled and began to reverse.
A daily close below the 0.6414-29 area marked by the November 18 low and the 100% Fibonacci expansion paves the way for a test of the 123.6% level at 0.6303. Alternatively, a reversal back above support-turned-resistance at 0.6525, the 76.4% Fib, opens the door for a retest of the 61.8% expansion at 0.6593.
Our trading strategy requires a 2:1 risk/reward ratio to initiate a trade.With that in mind, we will set an entry order to short NZD/USD at 0.6493. If triggered, the position will initially target 0.6429 and carry a stop-loss to be activated on a daily close above 0.6525.
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