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NZD/USD Technical Strategy: Flat
- New Zealand Dollar stalls at familiar resistance, ending 5-day win streak
- Pullback conspicuously leaves near-term uptrend, former resistance intact
- Further confirmation needed to make for an actionable trade opportunity
The New Zealand Dollar stalled at familiar resistance below the 0.75 figure against its US counterpart, ending an explosive five-day rally. Prices are yet to break the near-term series of higher highs and lows however. The pullback also conspicuously stopped short of breaking former resistance, hinting it may be corrective.
From here, a daily close below falling trend line resistance-turned-support, now at 0.7375, may open the door for a larger downturn and ultimately expose the 38.2% Fibonacci retracement at 0.7186 for another test. Alternatively, a daily close above 0.7434 (September 20 high) targets the 50% Fib expansion at 0.7505.
Taking the short side seems premature absent confirmation of reversal, particularly considering the fundamental headwinds still facing the US Dollar. At the same time, proximity to resistance argues against entering long on risk/reward grounds. With that in mind, standing aside appears most sensible for now.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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