NZD/USD Technical Analysis: 2-Month Low Hit, Deeper Drop Expected
NZD/USD Technical Strategy: 0.6869
- New Zealand Dollar aims to extend decline after hitting two-month low
- Head and Shoulders topping pattern continues to point below 0.66 mark
- Waiting for improved risk/reward parameters to add to short position
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The New Zealand Dollar continues to sink against its US counterpart, hitting a two-month low after marking a top below the 0.70 figure with the appearance of an Evening Star candlestick pattern (as expected). A broader Head and Shoulders bearish reversal pattern implies a move below the 0.66 figure is in the cards.
For now, immediate support is in the 0.6619-0.6592 area. A break below that confirmed on a daily closing basis exposes the 0.65 figure next. Alternatively, a move back above support-turned-resistance in the 0.6686-0.6713 zone targets 0.6778, another former support reinforced by a falling trend line.
The short NZD/USD trade triggered at 0.6869 remains in play, aiming to capture downside follow-through. However, adding to the position seems unattractive from a risk/reward perspective at this point, with the pair sitting squarely atop near-term support.
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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.