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Talking Points:
- NZD/USD Technical Strategy: Flat
- Bearish candlestick pattern hints New Zealand Dollar top may be taking shape
- Adverse risk/reward setup, lacking confirmation argue against taking short trade
The New Zealand Dollar may be carving out a top against its US namesake after prices produced a bearish Dark Cloud Cover candlestick pattern. High-profile fundamental event risk threatens to trigger volatility and may materially alter technical positioning in the days ahead however.
Near-term support is at 0.7029, the 50% Fibonacci expansion, with a break below that opening the door for a test of the 38.2% level at 0.6945. Alternatively, a breach of the 61.8% Fib at 0.7112 confirmed on a daily closing basis paves the way for a challenge of the 76.4% expansion at 0.7215.
Positioning does not offer an actionable trading opportunity. First, prices are too close to support to justify entering short from a risk/reward perspective. Further, the series of higher highs and lows set from late May remains intact, calling for further confirmation before selling. Staying on the sidelines seems prudent.
Track short-term NZD/USD technical patters with the GSI indicator !
