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Talking Points:
- NZD/USD Technical Strategy: Short at 0.7230
- Falling channel marks nascent Kiwi Dollar down trend after HS breakdown
- Re-established short position looks for prices to test below 0.72 figure again
The New Zealand Dollar looks to be tracing out a choppy down trend after completing a bearish Head and Shoulders pattern, signaling a top in place against its US cousin. The move lower is confined within an emerging falling channel originating in mid-to-late August.
Near-term support is now at 0.7163, the 23.6% Fibonacci expansion, with a break below that opening the door for another test of the August 31 low at 0.7132. Alternatively, a daily close above 0.7264 that takes out the channel top and the September 5 high exposes the 38.2% Fib retracement at 0.7295 next.
A sharp bounce from channel floor support stopped out a short NZD/USD position aimed at trading the HS breakdown. The intersection of neckline support-turned-resistance and the channel top conspicuously held however, seemingly offering an opportunity to revisit the setup with improved risk/reward parameters.
With that in mind, another NZD/USD short trade has been activated at 0.7230, initially targeting 0.7163. A stop-loss will be activated on a daily close above 0.7264. Profit on half of exposure will be booked and the stop trailed to breakeven when (and if) the first objective is met.
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