NZD/USD Technical Strategy: NEUTRAL
- Kiwi Dollar testing 5-month support after establishing a double top
- Daily close below 0.67 may mark resumption of dominant downtrend
- Improved risk/reward and confirmation needed for actionable trade
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The New Zealand Dollar turned lower against its US counterpart after putting in a Bearish Engulfing candlestick pattern, as expected. Sellers are now testing trend line support guiding the move higher from early October, a barrier reinforced by a chart inflection area in the 0.6700-20 region.
Breaking below this barrier on a daily closing basis would expose the 0.6591-0.6619 zone next. More broadly, it would suggest that the dominant downtrend started in mid-April 2018 has resumed. Immediate resistance is in the 0.6893-0.6903 band, followed by the 0.6942-69 double top.
Prices are too close to immediate support to justify entering short from a risk/reward perspective. On the other hand, taking up the long side seems premature absent a defined bullish reversal signal. With that in mind, investors may opt for the sidelines until a more attractive opportunity presents itself.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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