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Talking Points:
- NZD/USD Technical Strategy: Flat
- Support: 0.8500-13 (Oct 22 close, 23.6% Fib ret.), 0.8414 (38.2% Fib ret.)
- Resistance: 0.8605 (trend line), 0.8630 (Apr 11 close)
New Zealand Dollar hinted a top is in the works against its US counterpart having formed a Bearish Engulfing candlestick pattern and broken a rising trend line set from early February. Follow-through has proven lacking however, with prices rebounding from support in the 0.8500-13 area marked by the October 22 close and 23.6% Fibonacci retracement. A reversal back above the trend line (0.8605) aims for the April 11 close at 0.8630. Alternatively, a push below support eyes the 38.2% Fib at 0.8414.
Prices are too close to relevant resistance to justify a long position from a risk/reward perspective. On the other hand, entering a short trade looks premature absent a new bearish reversal signal. We will continue to stand aside for now, waiting for a more attractive setup to present itself.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com