NZD/USD Technical Analysis: Double Top Forming Below 0.70?

NZD/USD Technical Strategy: NEUTRAL

• Bearish Engulfing candlestick pattern hints Kiwi Dollar top is forming
• Reversal confirmation needs break of trend support from January low
• Breakdown would initially expose support region near the 0.67 figure

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A New Zealand Dollar put in a Bearish Engulfing candlestick pattern on a test of resistance in the 0.6942-69 area, hinting that a move lower is ahead. A break below rising trend line support set from early January – now at 0.6842 – sets the stage for a decline to challenge the 0.6686-0.6713 zone.

Alternatively, a breach above resistance validated on a daily closing basis initially exposes the June 2018 swing top at 0.7060. This is followed by a more formidable upside barrier marking former range floor support in the 0.0.7174-88 region.

Confirmation of a bearish reversal – specifically, a clear breach of the near-term series of higher highs and lows – is still pending. That makes taking a short position at current levels appear to be premature. Opting for the sidelines appears to be most prudent until a better-defined opportunity presents itself.

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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