Previous: NZD/USD Trading in Rising Channel/Wedge (1/19)
NZD/USD
The 4H chart shows the NZD/USD continuing to trade in a rising channel/wedge. The pair found resistance at 0.8140 to start the week and the 1H chart shows a broken flag pattern. It also shows that the flag pattern took the retracement down to 61.8% of the latest upswing from 0.7993 to 0.8141 before a sharp rally broke above the flag pattern. If there is a follow through to the breakout, a conventional swing projection targets the 0.82 handle.
The rally so far has not regained the bullish momentum as the RSI has not pushed back above 60, and the 1/24 Asian session starts with a retreat from 0.8117. Will there be another correction to the downside to bring the pair back toward the 200 hour simple moving average, or the rising support? Or will the throwback respect the breakout swing and extend the rally? Let’s take a closer look at the 15-min chart to see what clues we can gather going forward into the Asian and then the European session.
The 15-minute chart shows that the RSI failed to tag 70, showing a lack of bullish momentum so far. Still a bounce off of 0.8093, 200 SMA and 38.2% retracement could be a sign that the breakout is still trying to prove itself. Then a return above 0.8117, as well as a push of the RSI in this time-frame above 70, while 1H RSI rises above 60, could be clue to bullish continuation heading into the European session. In this scenario, we should revisit 0.8140 area, with a break opening up 0.82.
A decline dropping below the 0.8078 level however signals weakness, and the correction scenario toward 0.8050 in the near term then 0.8025 (78.6% retracement in the 4H chart), is opened up. If this continues through 0.80, we are likely breaking below the 4H rising support, and a short-term decline can be expected in the 1/25 European-US session.
To gain free access to webinars to discuss risk and trade management as well as the fundamental backdrop for this pair, register at here at IBTrade.
Fan Yang CMT is the Chief Technical Strategist of IBTRADE and FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
