NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

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NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

NZD/USD Technical Strategy: Flat

  • New Zealand Dollar breaks near-term resistance, eyeing December high
  • Early topping cues on 4-hour chart hint recent gains may be corrective
  • NZD/USD short closed with small gain, confirmation sought to re-enter

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NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

The New Zealand Dollar reversed upward having briefly tested below the 0.66 figure, breaking downtrend resistance guiding the decline from the early-December high. Prices now aim to challenge inflection point resistance at 0.6884, with a break that exposing the December 4 high at 0.6969.

NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

Near-term support lines up in the 0.6754-78 area. A turn back below that confirmed on a daily closing basis opens the door for another challenge of the 0.6686-0.6713 zone. This is conveniently reinforced by trend line resistance-turned-support, making performance here a referendum on the validity of the upside breakout.

NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

Shorter-term positioning seems to be warning against betting on upside follow-through. Early signs of negative RSI divergence are emerging as prices prepare to test the underside of former support, hinting at ebbing upside momentum that may precede topping and a subsequent reversal downward.

NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

NZD/USD Technical Analysis: NZ Dollar Upswing May Soon Fizzle - NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

NZD/USD Technical Evaluation: NZ Dollar Upswing May Soon Fizzle

The short NZD/USD position activated at 0.6869 has been closed with a small gain following confirmation of the break through trend line resistance. Opportunities to re-establish exposure if near-term reversal cues are validated with a break below 0.6767. In the meantime, opting to stand aside seems prudent.

NZD/USD TRADING RESOURCES:

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter

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