(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.
Chief Technical Analyst
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