NZD Technical Analysis

NZD/USD Minor Support Surrounds .8200

-NZDUSD has responded to a trendline confluence. The trendlines in question extend off of the October and January highs and August and November lows. The reaction is consistent with an important market turn.
-.8238 and .8187 are possible reaction areas.

LEVELS: .8136 .8187 .8237 | .8310 .8345 .8362


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Talking Points:

• NZD/USD Technical Strategy: Flat
• Support: 0.8649 (23.6% Fib exp.)
• Resistance: 0.8689 (0.0% Fib exp.)

New Zealand Dollar pushed aggressively higher against its US counterpart to test resistance at 0.8675, the April 2013 swing high. A break above this barrier aims for the 38.2% Fibonacci expansion at 0.8725. Alternatively, a reversal below the 23.6% level at 0.8639 targets a rising trend line set from February, now at 0.8570.

Negative RSI divergence warns of a possible turn lower ahead but confirmation is lacking, suggesting a short trade is premature. On the other hand, entering long with prices squarely at resistance is unattractive from a risk/reward perspective. We will continue to stand aside for now.

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


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A Clear Bear Flag in AUD/NZD That Probably Won’t Work

Talking Points:

• Apparent Bear Flag Pattern in AUD/NZD
• The Hidden Support Zone That Changes Everything
• How to Overcome Recent Countertrend Momentum

As the market appears to be finally transitioning out of a relatively difficult cycle from the past month of trading, patterns are also undergoing a period of readjustment. Often, during times like these, certain novel situations can arise, and today's set-up in AUDNZD comes as a classic example of that.

The weekly chart below is sporting a clear downtrend, but one that has recently broken a steep declining line of resistance. This is strong evidence that the longer-term momentum is slowing down. According to textbook analysis, price should then rally or consolidate sideways to meet the next declining line of resistance, which stands more than 1,000 pips away.

Guest Commentary: Weakening Downtrend in AUD/NZD



Although the idea of a 1000-pip move is a distinctly juicy proposition, it is best to simply focus on smaller trades. Should price indeed rise that far, traders will be able to ride that move as a matter of course.

The bullish bias is somewhat contradicted by the below daily chart, however, which shows a brief recent uptrend has been broken and a lower high formed within the last few days of trading.

Guest Commentary: Crucial Hidden Support Line for AUD/NZD



Classical chart pattern analysis would classify the above pattern as a bearish flag, and a break of this pattern (which has occurred) would be a bearish signal. And normally, this would be true. However, the daily chart also reveals a hidden horizontal line of support (at 1.0748) that could potentially wreck this pattern.

As a result of the hidden support line, price has to conclusively break this level to re-create firm bearishness. Thus, there is a distinct opportunity for nimble longs at this juncture.

The four-hour chart below offers lots of confluence support, all coinciding within the shaded blue box. There are horizontal support levels, the hidden support line from the daily chart, and the declining daily trend line all contained in this area.

In combination, these provide a support zone of 1.0744-1.0771. This zone is 27 pips deep, which is a very small risk zone for a trade that has literally 1,000 pips or more to move under the most optimistic scenario.

Guest Commentary: Confluence Support on 4-Hour Chart of AUD/NZD



The challenge, of course, is the downward momentum currently being exhibited by price.

Classical Elliott wave analysts will likely have some bones to pick about the wave count marked on the below hourly chart. However, it is quite likely that price, having already made a momentum move, may pull back a little before making a final charge lower into the shaded blue support zone.

Guest Commentary: Elliott Wave Pattern in Play for AUD/NZD



The trade would actually be less tempting if price simply charged straight in. Nonetheless, it is possible to take a long from this zone using pin bars, bullish reversal divergence, and/or bullish engulfing patterns on this hourly time frame.
As always, two or three attempts may be required, and traders can consider using reduced risk in order to account for the threatening momentum, particularly if wave 3 does charge straight into the support zone without a pullback.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com


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Talking Points:

• Daily Pennant Consolidation in AUD/NZD
• Key Resistance Zone for Initiating New Shorts
• Less-than-Favorable Hourly Signals to Contend with

Even though markets continue to move in spurts, there are still opportunities to be had. Over the past week, market alignment has shown signs of shifting, and hopefully, this will mark the dawn of a more benevolent period.
Especially of late, many have commented on the lack of FX volatility, but more interesting is that what is traditionally the most fruitful half of the year has flown by in 2014 with relatively scant pickings. June is typically a low-volatility month as well, and thus, it will be interesting to see if it reverses character and brings some nice trends into play instead.

Currently, the pennant on the below daily chart of AUDNZD is interesting mainly because the preferred breakout direction of this trade is down. And, should it turn downwards at this point near the top of the pennant formation, the risk profile for new shorts should be excellent, as a move to the rising support line would contain 260 pips or more.

Guest Commentary: Daily Pennant Consolidation in AUD/NZD



Meanwhile, the four-hour chart below shows price already beginning to flirt with a declining line of resistance that was not clearly visible on the daily chart. Nearby highs and lows readily provide guidance as to a reasonable zone for interacting with price, thus producing an estimated resistance area of 1.0850-1.0878.

Guest Commentary: Key Resistance Zone for Selling AUD/NZD



The hourly chart, however, provides a reason to be cautious. The recent rally into the resistance zone consisted of six consecutive bullish candlesticks. Although price is currently showing some signs of reaction, it is still relatively soon to be making any decisions.

Guest Commentary: Selective Short Signals in AUD/NZD



Moreover, more active traders may even prefer to enter on the 15-minute chart (not shown), where a clear M-type formation denoting a top might be an even better entry.

For those who prefer the hourly chart, however, it would be wiser to wait for a bearish black candle to form, effectively signalling the re-entry of sellers into the fray. Then, let patience prevail and allow the bulls one last gasp to the topside before going in short using bearish reversal divergence, pin bars, and/or bearish engulfing patterns as entry signals.

This may play out quickly, with a bearish candle immediately followed by a bullish one, and then another bearish one. Alternatively, it may play out over several candles and not actually trigger until next week.
Nonetheless, the formation of this trade is one of the most attractive in recent memory, and as a result, it’s worth two or three attempts at the entry. Afterall, the risk zone is a mere 28 pips deep.
By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com


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W1 price is located below 200 period SMA and near 100 period SMA for the primary bearish market condition with the secondary ranging: the price is ranging within 50.0% Fibo resistance level at 1.1010 and Fibo support level at 1.0494.

If the price will break Fibo support level at 1.0494 so the bearish trend will be continuing.
If the price will break 50.0% Fibo resistance level at 1.1010 from below to above so the local uptrebd as the secondary bear market rally will be started with the good possibility to the reversal of the price movement to the bullish market condition.
If not so the price will be ranging within the levels.

Trend:

• W1 - ranging bearish

Intra-day price is located between SMA with period 100 (100 SMA) and SMA with the period 200 (200 SMA) for the ranging market condition waiting for the direction for the possible breakout or breakdown.

• If the price will break 1.1138 resistance level so the bullish reversal will be started.
• If price will break 1.1043 support so the bearish trend will be continuing within ranging.
• If not so the price will be ranging within the levels.

Resistance	Support
1.1138	1.1043
1.1331	N/A

• Recommendation to go short: watch the price to break 1.1043 support level for possible sell trade
• Recommendation to go long: watch the price to break 1.1138 resistance level for possible buy trade
• Trading Summary: ranging

SUMMARY : ranging

TREND : waiting for direction

Daily price is located below 200-day SMA for the primary bullish market comndition. The price is breaking 10-day low level at 1.0650 to below for the bearish trend to be continuing.

If the price will break 1.0650 support level so the primary bearish market condition will be continuing.
If the price will break 10-day high at 1.0918 to above so the reversal of the price movement from the primary bearish to the primary bullish condition will be started.
If not so the price will be ranging within the levels.

Trend:

• D1 - bearish

H1 price is on ranging within 1.0494 resistance and 1.0447 support level waiting for the direction of the strong trend to be started.

If the price breaks 1.0494 resistance to above so the intra-day bullish trend will be resumed.
If the price breaks 1.0447 support level so the primary bearish market condition will be started.

H4 price is below 100 SMA/200 SMA for the bearish market condition: the price is on ranging within the following support/resistance levels:

• 1.0462 resistance level located in the beginning fo the bear market rally to be started, and
• 1.0418 support level located in the primary bearish trend to be resumed.

Daily price is above 200-day SMA in the bullish area of the chart.

The price is on ranging within 1.0760/1.1017 support/resistance levels waiting for the bullish trend to be resumed or for the secondary correction to be started.