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- NZD/USD Technical Strategy: Flat
- Kiwi Dollar testing three-week highs after breaking from near-term down trend
- Overall positioning still favors bearish bias but entering short seems premature
The New Zealand Dollar touched a three-week high after breaking its near-term down trend but the broader directional bias still seems to favor weakness. The currency has invalidated the series of lower highs and lows set form late September but the breach of trend support set from August 2015 remains valid.
A break back below the 14.6% Fibonacci retracement at 0.6894 confirmed on a daily closing basis targets 0.6832, the 14.6% Fib expansion. Alternatively, push above the November 9 high at 0.6980 exposes trend line support-turned-resistance at 0.7019, followed by the 0.7054-77 area (October 9 low, 38.2% retracement).
The short NZD/USD position triggered at 0.6804 was stopped out. Re-entering the trade now seems premature absent confirmation that the current upswing is in fact corrective and is over. Without meaningful evidence to that effect, opting for the sidelines appears to be most attractive.
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