Forex Technical Update June 24, 2010 NZD/USD: Stalking Double Top Action
- Daily: The NZD/USD pair has had a strong run in the last couple of weeks. This rally break out from a consolidation zone between 0.6850 and 0.6550, and has reached 0.7160. This reaches a pattern breakout projection.
- It is also important to note the test of 78.6% retracfement, as well as the previous support and the 200-period moving average.
- The RSI is at the resistance area for a bearish trend. Therefore turning lower from around 60 suggests the pair is still in a bearish mode.
- 4H: The 4H chart shows a double top forming, if the market can break below 0.7020. Since in the short-term the pair is still bullish, the first target for a break below this topping action is 0.69. This is a powerline and is a pattern breakout projection (width of the topping channel in the direction of the breakout).
- This is also the 200-period Moving average and between the 50 and 38.2% retracement level.
- Anticipate some bullish attempt here, or if not, lower at the 61.8% retracement level at 0.68.
- If the market indeed completes a double top, declines and the 4H RSI breaks below 40, I wouldn't expect a bullish attempt to break the 0.7160 high.
- Basically, we are seeing some early reversal signals suggest a return to the bearish mode.
Fan Yang Currency Analyst Commodity Trading Advisor
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