NZD/USD Technical Analysis: Upswing May Precede Further Weakness
NZD/USD Technical Strategy: FLAT
- Morning Star candlestick pattern hints at Kiwi Dollar bounce ahead
- Any upswing is likely to be corrective within a broader bearish trend
- Waiting for improved risk/reward, technical clarity to enter a trade
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The New Zealand Dollar produced a bullish Morning Star candlestick pattern after finding support above the 0.64 figure against its US counterpart, hinting a rebound may be in the cards ahead. The broader trend bias continues to be defined a series of lower highs and lows stretching back to mid-April however, suggesting that any upswing from here might be corrective.
Prices are now eyeing support-turned-resistance at 0.6501, the September 11 low. A break above that confirmed on a daily closing basis opens the door for a challenge of falling trend resistance in the 0.6549-0.6636 area. Alternatively, turn back below initial support marked by the October 8 low at 0.6425 paves the way for a test of the January 2016 bottom at 0.6348.
An actionable NZD/USD trade setup seems to be absent at present. The path of least resistance favors weakness but entering short now is unattractive as bullish cues emerge. A tactical long position is also unappealing as prices hover just below immediate resistance, skewing risk/reward considerations against the trade. On balance, standing aside until a better opportunity emerges seems most prudent.
NZD/USD TRADING RESOURCES:
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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.