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Talking Points:
- NZD/USD Technical Strategy: Flat
- Support: 0.8513 (Oct 22 close), 0.8452 (38.2% Fib ret.)
- Resistance: 0.8547 (23.6% Fib ret.), 0.8635 (trend line)
New Zealand Dollar declined against the US Dollar as expected having produced a Bearish Engulfing candlestick pattern below resistance at the April 2013 high (0.8675). A move through the 23.6% Fibonacci retracement at 0.8547 has exposed 0.8513, the October 22 close. Moving further below that eyes the 38.2% level at 0.8452. Alternatively, reversing back above 0.8547 aims for rising trend line support-turned-resistance at 0.8635.
Prices are too close to relevant support to justify entering short from a risk/reward perspective. On the other hand, the absence of a bullish reversal signal hints it is premature to take up the long side. We will continue to stand aside for now.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com