NZD/USD Technical Strategy: Flat
- New Zealand Dollar breaks near-term resistance, eyeing December high
- Early topping cues on 4-hour chart hint recent gains may be corrective
- NZD/USD short closed with small gain, confirmation sought to re-enter
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The New Zealand Dollar reversed upward having briefly tested below the 0.66 figure, breaking downtrend resistance guiding the decline from the early-December high. Prices now aim to challenge inflection point resistance at 0.6884, with a break that exposing the December 4 high at 0.6969.
Near-term support lines up in the 0.6754-78 area. A turn back below that confirmed on a daily closing basis opens the door for another challenge of the 0.6686-0.6713 zone. This is conveniently reinforced by trend line resistance-turned-support, making performance here a referendum on the validity of the upside breakout.
Shorter-term positioning seems to be warning against betting on upside follow-through. Early signs of negative RSI divergence are emerging as prices prepare to test the underside of former support, hinting at ebbing upside momentum that may precede topping and a subsequent reversal downward.
The short NZD/USD position activated at 0.6869 has been closed with a small gain following confirmation of the break through trend line resistance. Opportunities to re-establish exposure if near-term reversal cues are validated with a break below 0.6767. In the meantime, opting to stand aside seems prudent.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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