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Talking Points:
- NZD/USD Technical Strategy: Flat
- Support: 0.8639 (23.6% Fib exp.), 0.8585 (trend line)
- Resistance: 0.8675 (Apr’13 high), 0.8725 (38.2% Fib exp.)
New Zealand Dollar may be carving out a top against its US counterpart as prices show a Shooting Star candlestick pattern at resistance marked by the April 2013 high (0.8675). Negative RSI divergence bolsters the case for a downside scenario. Near-term support is at 0.8639, the 23.6% Fibonacci expansion, with a push below that eyeing a rising trend line set from early February, now at 0.8585. Alternatively, a reversal above 0.8675 initially exposes the 38.2% Fib at 0.8725.
Risk/reward considerations argue against entering a trade with prices so close to relevant up- and downside technical barriers. We will opt to stand aside for now, waiting for breach of trend line support on a daily closing basis to confirm reversal and yield a short entry opportunity.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com