Forex Technical Update

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NZD/USD 4H Chart 7:00 AM EDT 8/29/2012


The NZD/USD is in a second swing downwards since finding resistance at about 0.8223. As you can see in the 4H chart, it is about to completed a Gartley, where the latest wave will be similar to the first wave down. This projection targets the 0.80 level, between 50 and 61.8% retracement of the latest bull run from 0.7811 to 0.8223.

You can call this an ABC correction, and some will call this a Gartley, harmonic retracement pattern. The idea is that some chartists will look for support here at this psychological handle and wave projection at 0.80.

In the daily NZD/USD chart, note that the 0.80 area is also near the 200-day SMA, another factor to consider for support. Another observation is that it has been respecting a declining trendline, but is breaking below a rising trendline connecting the June 1 low of 0.7463 with the July 25 low of 0.7807.

The price action at the moment therefore has 2 dynamics. While the breakout exposes a bearish outlook, the structure is going to invite bullish intent. If there is indeed a pullback from the 0.80 area, let's watch if the market will hold it under the 0.8075 pivot. This would give a good indication that the intent is still bearish after the breakout.

Then if price can clear the 200-day SMA, we are likely bearish in the short-term toward the 0.7840 and 0.7807 support pivots from a previous consolidation period.

Otherwise, a rally back above 0.81 makes the breakout suspect, and invites upside focus toward the 0.8313 high from March-April consolidation.

NZD/USD Day Chart 7:05 AM EDT 8/29/2012


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.