NZD/USD has been trading sideways while trapped inside a 150-pip trading range or rectangle, with resistance and support respectively at the 0.6720 and the 0.6570 handles. Presently, price is moving higher for a potential test of the channel’s resistance area. For those of ya who are planning to trade within the range, just note that stochastic is already indicating overbought conditions, so y’all better get ready for a potential selling opportunity. For the more aggressive traders who are looking for a breakout play, just know that the moving averages have crossed-over into uptrend mode. Also, the 100 SMA may act as dynamic support for a potential upside move.
As I always say, one of the most conservative ways to play a descending channel is to look for selling opportunities near the top of the channel, so y’all better start looking because that’s where price is currently at. Looking at our technical indicators, the moving averages are in downtrend mode, although the fact that neither moving is acting as dynamic resistance is a bit worrying. Stochastic is indicating overbought conditions at least, but it’s still pointing up, so forex traders who are bullish on the pair may still have some fight left in them.
AUD/NZD tried to breach resistance at the 1.0870 handle on two different occasions, but resistance held and both attempts failed. In the process, a potential double top is beginning to take shape, so sound the reversal alert. Price is currently milling about just above the forex chart pattern’s neckline at the 1.0730 handle. If price does breach the neckline with sufficient and convincing momentum, then the resulting selloff may last for around 140 pips, based on the height of the chart pattern. Stochastic is already pointing up and moving away from oversold conditions, though, so there’s a chance that the pattern will not be validated. In any case, just make sure to practice proper risk management should you find a trade based on this or any of the other charts, okay?
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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