Forex Technical Update
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.
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.
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