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Talking Points:
- NZD/USD Technical Strategy: Flat
- New Zealand Dollar suffers largest 2-day drop in over four months
- Actionable setup sought to enter trade, short side favored for now
The New Zealand Dollar suffered the worst two-day loss in over four months against its US counterpart after an upswing topped just above the 0.74 figure. Renewed selling pressure may mark resumption of a trend reversal triggered with a rising trend line break in the second half of September.
From here, a daily close below the 50% Fibonacci expansion at 0.7177 opens the door for a test of the 0.7111-24 area (rising trend line set from January, 61.8% level). Alternatively, a reversal back above the 38.2% Fib at 0.7231 paves the way for a challenge of the 23.6% expansion at 0.7296.
The near-term trading range is a bit too narrow to justify taking a position from a risk/reward perspective. Furthermore, markets remain shaky as investors digest the outcome of the US presidential election, which may translate into knee-jerk volatility for the sentiment-linked Kiwi. Staying flat seems sensible for now.
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