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 overturned signs of topping identified last week, powering upward to hit the highest level since early April against its US counterpart. The latest surge came against the backdrop of dovish commentary form Fed officials setting the stage for the onset of interest rate cuts.
Buyers now aim to challenge the outer layer of resistance guiding NZDUSD downward since late July 2017, presently at 0.6825. A daily close above that would mark an important bullish turn in overall positioning, setting the stage for a rise to challenge triple top resistance north of the 0.69 figure.
The dominant trend bias remains bearish in the meantime however. In fact, overt signs of negative RSI divergence warn that upside momentum might be ebbing. That might precede a reversal lower, paining recent gains as corrective within the context of the broader downtrend.
In any case, an actionable trade setup seems absent for the moment. Chasing the pair higher on the long side might be premature without a defined resistance break. The same may be said for entering short absent defined signs of topping, let alone before any such turn is confirmed.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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