NZD/USD Technical Strategy: FLAT
- 2-month countertrend support break hints NZ Dollar bounce over
- Initial support centered on 0.67, resistance just below 0.69 mark
- Short NZD/USD triggered, eyeing longer-term trend resumption
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The New Zealand Dollar put in a bearish Dark Cloud Cover candlestick pattern and turned downward on a test of resistance in the 0.6837-84 area. The setup hints that a nearly two-month upswing against its US namesake may have run its course.
Zooming into the four-hour chart, prices appear to have broken counter-trend support guiding the upswing since late October. That bolsters the case for bearish resumption and seemingly opens the door for a decline to test the first layer of significant support in the 0.6680-0.6708 area.
Signs of bearish reversal appeared to be accompanied by attractive risk/reward parameters and a short NZD/USD position was triggered at 0.6785. The trade will initially target 0.6680-0.6708 but the ultimate take-profit level will be a function of price action and is to be decided on a discretionary basis.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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