NZD/USD Technical Analysis: 3-Month Trend Support at Risk
To receive Ilya's analysis directly via email, please SIGN UP HERE
- NZD/USD Technical Strategy: Flat
- New Zealand Dollar drops to challenge three-month trend support
- Adverse risk/reward parameters argue against taking short trade
The New Zealand Dollar declined against its US counterpart after the formation of a Bearish Engulfing candlestick pattern, as expected. Prices are now challenging rising trend line support that has limited the downside and guided the pair higher since late May.
A daily close below trend line support – now at 0.7237 – opens the door for a test of the 38.2% Fibonacci retracement at 0.7176. Alternatively, a reversal back above support-turned-resistance in the 0.7294-0.7308 area (23.6% level, double top) paves the way for a challenge of the 14.6% Fib at 0.7367.
Prices are much too close to near-term support to justify entering short from a risk-reward perspective. Positioning is made less attractive still considering the daily narrowing of the available trading range courtesy of an upward-sloping lower bound. Opting for the sidelines seems prudent for now.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.