NZD/USD Technical Analysis: Trend-Defining Top May Be in Place
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- NZD/USD Technical Strategy: Flat
- Kiwi Dollar carves out dramatic Head and Shoulders topping pattern
- Entering short position seems premature pending further confirmation
The New Zealand Dollar may have carved out a dramatic Head and Shoulders topping pattern against its US counterpart that implies a return to 2017 lows ahead. Positive RSI divergence warns of ebbing downward momentum however, cautioning against taking the setup at face value (at least for now).
Near-term support is at 0.7188, the 50% Fibonacci retracement, with a daily close below that opening the door for a challenge of the 61.8% level at 0.7101. Alternatively, a move back above the H&S pattern’s neckline at 0.7229 sees the next major upside barrier at 0.7337, the August 21 high.
While tempting, entering short seems premature for now. Prices are sitting atop a support level and RSI positioning is worrisome. Furthermore, the upcoming speech from Janet Yellen at the Jackson Hole symposium amounts to potent event risk that may significantly alter the overall setup.
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