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Talking Points:
- NZD/USD Technical Strategy: Flat
- Kiwi Dollar rebound swiftly aborted below 0.70 figure
- Critical five-month support shelf back under pressure
The New Zealand Dollar found itself back on the defensive after an attempted recovery against its US namesake was promptly cut short below the 0.70 figure. Prices now stand on the precipice of a five-month support shelf, with action here likely to be formative for the longer-term directional bias.
A break below the 50% Fibonacci expansion at 0.6847 confirmed on a daily closing basis initially opens the door for a challenge of the 61.8% level at 0.6790. Alternatively, a move back above the 38.2% Fib at 0.6905 paves the way for a retest of the 0.6969-75 area (May 3 high, 23.6% expansion).
Positioning looks unattractive at this point. Prices are narrowly squeezed between near-term technical levels. They are also squarely at support, arguing on risk/reward grounds against a short trade in line with the recent trend bias. On balance, standing aside seems most prudent for the time being.
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