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NZD/USD Technical Analysis: Down Trend Boundaries Take Shape

NZD/USD Technical Analysis: Down Trend Boundaries Take Shape

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • NZD/USD Technical Strategy: Short at 0.7230
  • Falling channel marks nascent Kiwi Dollar down trend after H&S breakdown
  • Re-established short position looks for prices to test below 0.72 figure again

The New Zealand Dollar looks to be tracing out a choppy down trend after completing a bearish Head and Shoulders pattern, signaling a top in place against its US cousin. The move lower is confined within an emerging falling channel originating in mid-to-late August.

Near-term support is now at 0.7163, the 23.6% Fibonacci expansion, with a break below that opening the door for another test of the August 31 low at 0.7132. Alternatively, a daily close above 0.7264 that takes out the channel top and the September 5 high exposes the 38.2% Fib retracement at 0.7295 next.

A sharp bounce from channel floor support stopped out a short NZD/USD position aimed at trading the H&S breakdown. The intersection of neckline support-turned-resistance and the channel top conspicuously held however, seemingly offering an opportunity to revisit the setup with improved risk/reward parameters.

With that in mind, another NZD/USD short trade has been activated at 0.7230, initially targeting 0.7163. A stop-loss will be activated on a daily close above 0.7264. Profit on half of exposure will be booked and the stop trailed to breakeven when (and if) the first objective is met.

Want to learn how to trade economic news driving FX markets, including NZD/USD? See our guide!

NZD/USD Technical Analysis: Down Trend Boundaries Take Shape

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