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Talking Points:
- NZD/USD Technical Strategy: Flat
- Bullish candlestick pattern hints Kiwi Dollar may be bottoming vs. US namesake
- Technical confirmation, improved risk/reward needed for actionable trade setup
The New Zealand Dollar put in a bullish Morning Star candlestick pattern, hinting that a reversal higher against its US counterpart may be in the works. Interestingly, the currency seems to be finding strength despite continued political uncertainty after an inconclusive general election.
Near-term resistance is in the 0.7132-40 area (August 31 low, 23.6% Fibonacci retracement), with a daily close above that opening the door for a test of the 38.2% level at 0.7196. Alternatively, a reversal back below the 14.6% Fib at 0.7105 paves the way for another challenge of resistance-turned-support at 0.7054.
Prices are too close to resistance to justify entering long from a risk/reward perspective. Furthermore, the series of lower highs and lows defining the down move from the September 20 swing high is strictly speaking still in place. With that in mind, opting to stand aside seems most prudent for now.
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