NZD/USD Technical Strategy: 0.6869
- Evening Star candle pattern, negative RSI divergence hint at topping
- Break below counter-trend support line bolsters the case for weakness
- Short position re-established, initially targeting support above 0.67
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The New Zealand Dollar may be on the verge of resuming the down trend against its US counterpart. The appearance of a bearish Evening Star candlestick pattern coupled with negative RSI divergence signaled possible topping. Confirmation followed with a break of counter-trend line support.
From here, the next layer of major support looks to be in the 0.6686-0.6716 area. A break below that confirmed on a daily closing basis exposes former support in the 0.6592-0.6619 zone. Resistance is at 0.6969, the December 4 high, followed by the June 6 peak at 0.7060.
Risk/reward parameters appeared acceptable to attempt re-entry after a prior short NZD/USD trade was stopped out and exposure was established at 0.6869. The trade initially targets 0.6716. A stop-loss to be activated on a daily close above 0.6969.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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