Trade war jitters seem to be returning, so I’m looking at a potential short Kiwi play versus the safe-haven dollar. This downtrend channel is looking pretty strong!
Short NZD/USD Idea
The pair has been cruising lower inside a descending channel on its 4-hour time frame and has just recently bounced off the top. Another test of the resistance might be in the works since the mid-channel area of interest spurred a quick bounce.
Stochastic is already indicating overbought conditions on this chart, though, so sellers might be eager to return from here. As Forex Gump shared in his weekly outlook, price is testing a Fib and the broken neckline of a short-term double top.
Zooming in to the 1-hour time frame also shows that NZD/USD fell below a short-term rising trend line to signal a pickup in selling pressure. The Fib extension tool indicates the potential downside targets if current levels hold as resistance.
I haven’t set any orders yet, though, as I’m still trying to gauge how trade jitters might pan out. Word on Wall Street is that roughly $257 billion worth of tariffs on Chinese goods are up Uncle Sam’s sleeve in case talks between Trump and Xi don’t turn out well next month.
Now I’ve already gotten burned trying to cash in on these trade tensions when earlier tariffs turned out softer than expected. This time, I’m gonna be a little bit more careful and see how the situation turns out first and how markets react.
What do you guys think of this setup?
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