Risk-off is the name of the game on the session, which means the longer-term trend higher in NZD/USD may be bought at a better price. Is this a deal or is it the start of a bearish run in NZD/USD?
NZD/USD Pullback Support?
On the four hour chart above of NZD/USD, we’ve got a clean technical setup to check out. NZD/USD has been on a solid uptrend for a while now, going back to November 2020 where it bottomed out around 0.6600.
Since then, the bulls pushed the pair higher through rest of the year on positive risk vibes (thanks to positive vaccine news / recovery hopes) and negative U.S. dollar sentiment (on extreme Fed stimulus measures and potentially more fiscal aid to come).
So the medium to longer-term trend is definitely a friend of the bulls, and the pullback to start the new week may be an opportunity to play that trend at a better price. Given that there doesn’t seem to be a direct catalyst for the broad risk aversion sentiment, odds are that this move lower may fizzle out within the next few sessions unless we do get a solid catalysts for traders to take profits / get more defensive.
If you’re in that camp, this retest of the broken swing high and Fibonacci retracement area may the setup for you, and all that’s need now is some bullish reversal patterns to confirm that the area will hold as support.
But if you’re in the camp that thinks more negative headlines may be ahead (e.g., more political chaos in the U.S., accelerated rise in COVD-19 hospitalizations/deaths, etc.), then be on the look out for a break of both the Fibs area and previous level of interest before considering a short position for a fresh swing move lower.
What do you guys think? What could we see ahead to give this down move legs or spark a bullish reversal?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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