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NZDUSD Technical Analysis: One-Month Uptrend Broken. Now What?

NZDUSD Technical Analysis: One-Month Uptrend Broken. Now What?

2019-07-09 01:30:00
Ilya Spivak, Head Strategist, APAC
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NZDUSD Technical ANALYSIS: NEUTRAL

  • New Zealand Dollar marks swing top with Bearish Engulfing pattern
  • Break of uptrend from mid-June lows points to near-term bias change
  • Risk/reward improvement probably needed to inspire follow-through

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The New Zealand Dollar turned lower against its US counterpart after producing a Bearish Engulfing candlestick pattern, as expected. Sellers now target support in the 0.6575-91 area, with a break below that confirmed on a daily closing basis exposing the 0.6476-0.6501 zone. Resistance begins at 0.6653 runs upward through a dense bloc of overlapping barriers through 0.6727.

New Zealand Dollar vs US Dollar price chart - daily

Zooming in to the four-chart reveals a critical big of evidence supporting the case for downside follow-through. Prices have broken well-defined support guiding NZDUSD higher since mid-June, pointing to a palpable change in the prevailing near-term trend and adding a sense of bearish immediacy. Rejection at former support above 0.66 following the breakdown hints at further reinforcement.

NZDUSD Technical Analysis: One-Month Uptrend Broken. Now What?

With this in mind, prices are sitting in close proximity to immediate support, which might undercut the risk/reward case for establishing new short exposure. This might mean that the next sizable leg lower will require either a pull-up to improve relative positioning or further breakdown. The fundamental landscape seems to set the stage for the latter as markets ponder key event risk shaping Fed policy bets.

NZDUSD TRADING RESOURCES:

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

To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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