Forex Technical Update

Previous: NZD/USD to Break Consolidation Range Between 0.8245 and 0.8415 (2/26)





The NZD/USD has slide below a recent consolidation range when break below 0.8240 area, as seen in the 4H chart. This pushed the RSI below 30, establishing bearish momentum, but reflecting some oversold condition in the very short-term. Where might we expect this pullback to face resistance? Looking at the 4H chart, we see that the 200 simple moving average is near 0.8290, in confluence with 61.8% retracement of the 0.8404-0.8103 swing. The middle of the previous range is around 0.8340.

A bearish market should really not rally back above 0.83, and if it breaks above 0.8350, we should be considering possibility that we have completed a sharp ABC correction, with a bullish outlook. Otherwise, if a pullback respects the broken range as a topping pattern, we have further room to fall. Therefore, we might want to start looking for signs of resistance starting 0.8250 if the market gets there.

Risk: If we scale in positions starting at 0.8250 up to 0.83 and get an average entry of 0.8275, a stop at 0.8375 would be a risk of 100-pips. What about reward potential?

Reward: To the downside, 0.81 is the current low and is in confluence with the 200-day SMA. 0.8084 is 38.2% retracement of the 0.7460-0.8469 swing. If this support cluster is broken, we can look at 0.80, down to 0.7964(50% retracement). Here support factors being to be key. 0.7875 is a key pivot while 0.7845 is 61.8% retracement. The rising trendline also reside near the 0.79 area.

So if target is 0.80, stop at 0.8375, and avg. entry at 0.8275, the reward to risk is 275:100 or 2.75:1.

Fundamental Risks:

1) RBNZ Rate Decision (3/7)

2) Non-Farm Payroll (3/9)


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Fan Yang CMT is a forex trader, analyst, educator and main contributor for 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.