Previous: NZD/USD Moves Above Consolidation Pattern, Resistance Seen at 0.81 (1/11)

NZD/USD

The 4H chart of NZD/USD shows a bullish market trading in a rising channel or rather wedge since the support and resistance are not parallel but slightly converging. The RSI has been held above 40 and able to break 70, reflecting persistently bullish momentum. As the market crosses 0.8050, it found resistance at 0.8080 while tagging the channel/wedge resistance. So far price has been contained within this pattern, so as it slides, we ought to monitor pattern support, which should be coming up near 0.7950-0.7960.

The 1H chart below shows that if the market breaks this pattern support, it will also be forming other clues of a reversal. The NZD/USD will need to break below 61.8% retracement of the latest swing from 0.7864 to 0.8080 at 0.7947. The slide will also break below the 200 hour simple moving average which it has respected this year so far. The 1H RSI reading will have to dip below 30. With these signs showing in the 1H chart, we can look for a dip toward the 200 SMA in the 4H chart, which is also near  50% retracement of the 0.7460-0.8080 rally.

If the support holds, and the market continues to rally in this channel or wedge above 0.81, we can be looking at the next pivot to the upside, which is the Oct 2011 high, near 0.8240.

Fan Yang CMT is the Chief Technical Strategist 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.