NZD/USD Technical Analysis: Trend Reversal May Be at Hand
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- NZD/USD Technical Strategy: Short at 0.7273
- Trend reversal may be at hand after NZ Dollar breaks key support
- Short position triggered, initially targeting drop below 0.72 figure
The New Zealand Dollar has broken below support marked by a rising trend line guiding the currency higher since late May, hinting a bearish trend reversal is afoot. Prices established a top after putting in a Bearish Engulfing candlestick pattern below the 0.75 figure, as expected.
Near-term support is now at 0.7176, the 38.2% Fibonacci retracement, with a break below that opening the door for a test of the 0.7080-0.7102 area (50% level, horizontal pivot). Alternatively, adaily close back above the trend line – now at 0.7283 – paves the way for a challenge of the September 22 high at 0.7370.
A bounce to retest trend line support-turned-resistance after the initial breakdown offered improved risk/reward parameters and a short trade was triggered at 0.7273, initially targeting 0.7176. A stop-loss will be activated on a daily close above 0.7338. Half of open will be booked and the stop-loss trailed to breakeven once the first objective is met.