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Talking Points:
- NZD/USD Technical Strategy: Flat
- Support: 0.7831, 0.7682, 0.7584
- Resistance:0.7872, 0.7937, 0.8034
The New Zealand Dollar advanced as expected against its US counterpart having produced a Bullish Engulfing candlestick pattern. Near-term resistance is at 0.7872 marked by a falling trend line set from late October, with a break above that on a daily closing basis exposing the 23.6% Fibonacci retracement at 0.7937. Alternatively, a turn below the 14.6% level at 0.7831 clears the way for a challenge of the July 2013 bottom at 0.7682.
Risk/reward considerations argue against entering long with prices in close proximity to resistance. On the other hand, the absence of a defined bearish reversal signal suggests taking up the short side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com