NZD/USD Technical Analysis: Topping Pattern Points Below 0.66
NZD/USD Technical Strategy: 0.6869
- New Zealand Dollar makes good on signs of topping below 0.70 mark
- Drop below 0.66 mark hinted by Head and Shoulders pattern structure
- Short position in play, attractive risk/reward needed to add exposure
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The New Zealand Dollar turned lower against its US counterpart as expected after putting in a bearish Evening Star candlestick pattern and breaking counter-trend support. The top now looks to have taken the shape of a Head and Shoulders pattern, implying a measured move below the 0.66 figure ahead.
Near-term support is in the 0.6699-0.6713 area, with a break below that confirmed on a daily closing basis opening the door for a test of the 0.6592-0.6619 zone. Alternatively, a move back above former support in the 0.6754-78 region paves the way for a test of falling trend line resistance, now at 0.6842.
A short NZD/USD position was activated at 0.6869. The trade will remain in play from here, aiming to capitalize on bearish development as the dominant down trend regains momentum. Opportunities to add to exposure will be evaluated if a compelling risk/reward setup to do so presents itself.
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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.