NZDUSD Technical ANALYSIS: NEUTRAL
- New Zealand Dollar rejected at chart resistance near three-month high
- Bearish Engulfing candlestick pattern hints a top may have been formed
- Confirmation of reversal needs break of rising trend line from mid-June
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The New Zealand Dollar put in a Bearish Engulfing candlestick pattern on a retest of support-turned-resistance in the 0.6699-0.6727 area, hinting that the upswing of mid-June lows may have topped. Initial support line in the 0.6653-73 zone, with a break below that on a daily closing basis opening the door for another challenge of the 0.6575-91 region.
A look at more immediate positioning on the four-hour chart warns against overextrapolation however. Prices are resting at rising trendline support defining the bounds of the latest upside foray, warning that a convincing reversal is yet to be confirmed. Indeed, a bounce from support may yet materialize, with a push above the 0.6682-85 price band putting the June high at 0.6727 back in focus.
On balance, this makes for conflicted direction cues and hints that traders might opt against showing strong commitment one way or another until greater clarity can be had. A break below trend support – now at 0.6645 – would begin to resolve the matter in sellers’ favor. Alternatively, a daily close above last month’s swing top would invalidate topping cues and set the stage for upward continuation.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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