NZD/USD Technical Analysis: Flirting with Major Bearish Breakout
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- NZD/USD Technical Strategy: Flat
- Kiwi Dollar sinks 5.5-month low against US counterpart amid risk aversion
- Breakout confirmation needed to make for actionable short trade opportunity
The New Zealand Dollar looks poised to start the next leg of a three-month down trend after dropping to the lowest since early June against its US counterpart. The push downward was triggered amid broad-based risk aversion after news that Special Counsel Robert Mueller subpoenaed the Trump campaign.
The next layer of support comes in at 0.6745, the 38.2% Fibonacci expansion, with a break below that on a daily closing basis opening the door for a challenge of the 50% level at 0.6672. Alternatively, a reversal back above the 23.6% Fib at 0.6835 paves the way for a retest of the 14.6% expansion at 0.6890.
Entering short is a tempting proposition but the push through October’s swing low still needs confirmation at the daily close to be conclusive. That suggests that committing to exposure is a bit premature for now, arguing for patience until a better-defined opportunity is on offer.