NZD/USD Technical Analysis: A Top in Place Below 0.74?

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Talking Points:

• NZD/USD Technical Strategy: Flat
• Kiwi Dollar may have topped below 0.74 figure vs. US counterpart
• Waiting for passage of event risk, improved risk/reward to enter short

The New Zealand Dollar may have put in a top against its US counterpart, with prices showing a Bearish Engulfing candle pattern and breaching near-term trend support. The appearance of negative RSI divergence hints at ebbing upside momentum and bolsters the case for a downside scenario.

From here, a daily close below the 14.6% Fibonacci expansion at 0.7259 opens the door for a challenge of the 23.6% level at 0.7203. Alternatively, a reversal above the January 31 high at 0.7350 paves the way for a retest of the November 8 2016 swing high at 0.7403.

Prices are too close to near-term support to justify entering a short trade from a risk/reward perspective. Furthermore, on-coming event by way of the US jobs report seems to carry significant downside risk for the greenback. As such, standing aside seems prudent for now.

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