(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; downtrend lines in red; uptrend lines in green; chart patterns in magenta; 50-period simple moving average in light blue.)
2/10/2009 – NZD/USD – Well-entrenched in a substantial downtrend since the long-term high was hit in March 2008, NZD/USD (a daily chart of which is shown) has recently been in a short-term bullish retracement up towards a key downtrend resistance trendline. This trendline extends from the high hit in mid-July 2008. Ideally, the current retracement should target dynamic resistance up around this downtrend line (currently just above the 0.5600 region), before potentially continuing down in the direction of the long-term downtrend. However, in the event that a premature bearish move occurs, price action may be measured by any significant breakdown of the short-term uptrend support line that defines the current bullish retracement. A breakdown of this nature should also break down below strong horizontal support in the 0.5200 region. In this event, further support to the downside resides around the 0.4960 region, the level of the recent long-term low.
James Chen, CMT
Chief Technical Strategist
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