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NZD/USD Technical Analysis: Double Top in the Works?

NZD/USD Technical Analysis: Double Top in the Works?

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar may be forming double top at June high vs. US counterpart
  • Waiting for confirmation, improved risk/reward setup to enter short trade

The New Zealand Dollar has settled into a range above the 0.42 figure against its US counterpart after prices failed to break out on a test of June’s swing high. Early signs of negative RSI divergence point to ebbing upside momentum and hint that a reversal downward may be ahead.

Near-term support is at 0.7208, the 38.2% Fibonacci expansion. A break below that targets a rising trend line at 0.7166, followed by the 23.6% level at 0.7117. Alternatively, a daily close above the June 24 high at 0.7298 opens the door for a test of the 61.8% Fib at 0.7355.

Prices are too close to support to justify entering short from a risk/reward perspective. Furthermore, negative RSI divergence is not a sufficient bearish reversal signal by itself without further confirmation. With that in mind, opting for the sidelines seems prudent for now.

Losing money trading NZD/USD? This may be why.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.