NZD/USD Technical Analysis: Sellers Take Aim at August Lows
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NZD/USD Technical Strategy: Short at 0.6680
- New Zealand Dollar down trend vs USD looks to be back in play
- Signs of indecision were followed by counter-trend support break
- Short position activated, initially targeting August swing bottom
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The New Zealand Dollar looks to be resuming the four-month downtrend against its US counterpart after a tepid rebound ran out of steam, as expected. Disappointing economic data emerged as a near-term catalyst as ANZ bank said its gauge of business confidence has dropped to the lowest in ten years.
The four-hour chart reveals signs of ebbing upside momentum telegraphed in negative RSI divergence on a retest support-turned-resistance. This is followed by a break of countertrend line support established the mid-August swing bottom, suggesting sellers have retaken the initiative.
Turning to the daily chart, the first layer of significant support looks to be in the 0.6545-60 area. A daily close below that opens the door for a test of the 38.2% Fibonacci expansion at 0.6402. Alternatively, reversal above support-turned-resistance at 0.6726 exposes the 0.6851-70 zone (May 16 low, 38.2% Fib retracement).
A short NZD/USD position was activated at 0.6680, initially targeting 0.6560. A stop-loss will be activated on a daily close above 0.6726. Opportunities to add to exposure will be evaluated after the trade’s initial objective has been achieved.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.