Technicals

(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; chart pattern in yellow; 50-period simple moving average in light blue.)

4/14/2008 NZD/USD Todays Chart of the Day on the NZD/USD daily chart, as shown, is simple and rather clear-cut. Within the medium-term parallel uptrend channel that has been forming since at least September 2007, price has just formed a rather well-defined inverted flag pattern (represented on the chart by the dotted yellow lines). Although there is absolutely no doubt that the pair is ensconced in a long-term uptrend, short-term price action is currently showing a downward retracement back towards uptrend support. Within this short-term downward retracement, the current inverted flag formation could be serving as a continuation pattern, helping to nudge price further down towards the bottom support line of the parallel uptrend channel (represented on the chart by the long, parallel green lines). Therefore, a breakdown of the flags bottom line with follow-through could present an opportunity to short the pair. In this event, price should target major support at the bottom line of the parallel uptrend channel.

James Chen

Chief Technical Analyst

FX Solutions

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