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NZD/USD Stalking Gartley
- Weekly and Daily: The weekly chart shows the pair had reached the 78.6% retracement level at 0.7500. It paused, showing an engulfing bearish candle. This week, the pair is attempting another rally.
- Daily: The NZD/USD has been strong but there was a downswing in the second half of October. The start of November saw the pair rebound from just above the 61.8% retracement level or 0.7100.
- The failure to reach the previous peak spells a lost of bullish interest. The reversal combination at just below 0.7500 hints at further decline. The conservative bearish outlook is that this is a Gartley pattern, and that the long-term uptrend is not over.
- The market is no particularly bullish nor bearish in the medium-term in the daily timeframe. You can see this reflected by the ADX of the Directional Movement System declining. The ADX rises when trends strengthen, and declines when trends go into consolidation mode. Here, an additional confirmation is a cross of the DI- above the DI+. These 2 indicators are similar to stochastic in that they are depend on momentum, so it would almost be redundant to use both, and may add to a sense of confidence when really both are saying the same thing.
- Anyway, we are in ranging mode. Therefore we can consider a bearish case, but only in the short term, and we would have to monitor the price movements closely.
NZD/USD Back to Where it Started
- 4H: We see that the market is returning to where it started this week with a rally. The rally was topped at the 0.7450 area, the 61.8% retracement level.
- Now the market is testing the 0.7300 area. If this holds, we may still have an attempt to the previous high at about 0.7600. We will observe the 0.7300 area to see which scenario is more likely. The 1st, where the decline extends to 0.6900 and completes a Gartley, and the 2nd where the support holds, and the market continues its rally to retest the previous high.
- The first is the preferred. The second may not materialize even if the support holds. We may have a re-test of 0.7450, which may still hold, resulting in a range between 0.7300 and 0.7450.
- However, if the rally instead gets cut short before 0.7400, the previous short-term support, our bearish case would be strengthened.
Fan Yang
Currency Analyst,
Commodity Trading Advisor
