NZD/USD Technical Analysis: 10-Month Down Trend Broken
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- NZD/USD Technical Strategy: Flat
- Kiwi Dollar breaks above resistance capping gains since September 2016
- Adverse risk/reward setup, inconclusive positioning argue for the sidelines
The New Zealand Dollar raced higher against its US namesake, smashing out of a narrow consolidation range to post the largest daily gain in over six months. Prices have now tagged the highest level in 14 months, overturning the downward trend in play since September 2016.
From here, a daily close above the 61.8% Fibonacci expansion at 0.7529 opens the door for a challenge of the 76.4% level at 0.7606. Alternatively, a reversal back below the 50% Fib at 0.7466 – now recast as support – paves the way for a retest of the 38.2% expansion at 0.7404.
On one hand, prices are too close to immediate resistance to justify entering long from a risk/reward perspective. On the other, the absence of a defined bearish reversal signal warns that it is premature to take up the short side. Staying flat seems like the thing to do for the time being.