Time for a break-and-retest setup! NZD/USD recently broke below a short-term support area around .6430 then dipped to a low of .6312 before pulling up. Price seems to be testing the resistance around the 50% Fibonacci retracement level but might still go for a higher pullback to the 61.8% Fib, which coincides with the broken support and the 200 SMA. Stochastic is already on the move down, suggesting that Kiwi sellers are already on top of their game, while the 100 SMA is below the 200 SMA and showing that the downtrend is likely to carry on. In that case, NZD/USD could move back to its previous lows or even create new ones below the .6300 handle.
Steering clear of dollar pairs ahead of today’s NFP release? You might wanna look at this retracement setup on NZD/JPY’s 1-hour forex chart instead. Price already bounced off the 38.2% Fibonacci retracement level, which is around the area of interest at the 77.00 major psychological mark and the 100 SMA. The pair might now be ready to resume its drive down south, possibly until its previous lows at the 75.50 minor psychological level or much lower. After all, stochastic is already heading down so bearish momentum is already building up. In addition, the 100 SMA is below the 200 SMA, indicating that the path of least resistance is to the downside.
Not a fan of retracements? Then you might wanna consider this potential reversal play on EUR/NZD’s 1-hour forex time frame. The pair just formed a double top, signaling that a downtrend might be in order. Price has yet to break below the neckline around the 1.7250 minor psychological mark before confirming the potential selloff, which might last by around 700 pips or the same height as the chart pattern. For now, the 100 SMA is above the 200 SMA, suggesting that the uptrend is still intact, but a downward crossover could show that a reversal is in the cards. Stochastic is just pulling up from the oversold zone, which means that sellers are still taking a break.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.