NZD/USD Technical Analysis: Upswing May Offer Short Trade Setup
NZD/USD Technical Strategy: NEUTRAL
- Kiwi Dollar snaps six-month support, hints downtrend is resuming
- 4-hour wedge breakout warns of delay in downside follow-through
- Structural bullish trend reversal needs a daily close above 0.6969
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The New Zealand Dollar broke below rising trend line support guiding it higher since early October 2018. This suggests that the dominant downtrend against the US Dollar launched in April 2018 may be resuming. Near-term positioning hints downside follow-through may not materialize immediately however.
The initial foray lower was rejected as prices bounced from now-familiar range support in the 0.6686-0.6721 area. Turning to the four-hour chart, the completing of a bullish Falling Wedge pattern seems to set the stage for an upswing to retest trend line support-turned-resistance.
If the upswing stops at this boundary, sellers may be offered compelling risk/reward parameters for a short trade. An actionable setup would need a discernible reversal signal and subsequent confirmation on a breach of the near-term series of higher lows, established from the April 5 low.
Alternatively, a daily close back above the trend line – now at 0.6818 – would neutralize immediate selling pressure and put the top of the 2019 trading range back into focus. That is in the 0.6939-69 zone. Clearing that barrier would suggest a longer-term bullish trend reversal is afoot.
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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.