Forex Technical Update

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NZD/USD Daily Chart 3:50PM EDT 8/23/2012

The NZD/USD has stalled its rally since the latest bull run from end of July. As you can see in the daily chart it popped up above a consolidation zone that lasted through June until late July. The NZD/USD has really been trading sideways since summer of 2011.

The alignment of the moving averages and relative action of price crossing the moving averages suggest that there has not been a trend developing since then. The RSI has slight bullish bias since June, but that bullish momentum has also stalled in the short-term (with the RSI falling back= between 40 and 60).

Note that price has entered a consolidation zone established during March through April, roughly between 0.8315 and 0.8070. So far in late July through August, the market has been trading in this zone. Will the market consolidate here again for a similar amount of time? If so, we can expect some range-bound action for another month of so, into late September.

Also note that before the March and April consolidation, there was some consolidation in February for 1 month. NZD/USD also had a 1-month consolidation from late June to late July between roughly 0.7910 and 0.8075.

Do you think the market will follow this analogy of time for consolidation? If so, a trading strategy of looking for support near 0.8050-0.8075 and looking for resistance near 0.83-0.8315 might be appropriate, of course, until this theory is proven wrong with a breakout. It might be prudent to go down into intra-day time-frames ie. 4H, 1H to look for more clues at these key levels before executing your trade(s).

Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to 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.