NZD/USD Technical Analysis: Wedge Setup Hints at Weakness
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- NZD/USD Technical Strategy: Flat
- NZ Dollar edges lower after finding resistance below 0.70 figure
- Wedge setup hints at losses but confirmation of reversal pending
The New Zealand Dollar is edging lower after finding resistance at a nine-month high below the 0.70 figure against its US counterpart. Prices appear to be carving out a bearish Rising Wedge chart formation, which hints a larger reversal downward may be brewing.
Near-term support is at 0.6820, the 23.6% Fibonacci retracement, with a break below that on a daily closing basis opening the door for a test of 0.6730 marked by the 38.2% level and the would-be wedge floor. Alternatively, a move back above the 14.6% Fib at 0.6876 paves the way for a challenge of the 0.6940-66 area (wedge top, March 30 high).
Prices are too close to near-term support to justify entering short in line with our 2016 fundamental outlook from a risk/reward perspective. Furthermore, it seems prudent to wait for reversal confirmation on a break of the wedge floor before committing to a trade given the degree of chop in recent price action. As such, we remain flat.
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