Talking Points
NZDUSD reverses off multi-year trendline
Near-term price action and RSI divergence shifts focus lower
Bearish below 8460- Short scalp conviction below 8300
NZDUSD Daily Chart
Chart Created Using FXCM Marketscope 2.0
Technical Outlook
NZDUSD reverses off former channel support dating back to July 2012
Daily RSI divergence identified on September & October highs
This week the pair pushed into fresh 5-month highs and then took out the weekly low = Bearish
Interim support 8340 (October opening range high & 23.6% retracement)
Key support range 8180-8214- Break to offer short conviction
Resistance 8435 – Breach above 8460/63 invalidation scalp bias
Breach above monthly high targets key resistance at 8634 & 8674
Momentum short trigger break pending
Key Events Ahead: US Durable Goods & Wholesale InventoriesTomorrow
NZDUSD Scalp Chart
Notes: The break below the weekly opening range low on the 23rd after making fresh monthly highs immediately shifted our focus lower on the Kiwi in the near-term. The pair has now failed to breach above former trendline support dating back to July of 2012 for five consecutive days with daily RSI divergence and a turnover in the oscillator suggesting an interim high may be in place.
The decline has now completed a 61.8% extension off the monthly highs and 30min RSI divergence suggests a bounce higher in the near-term should offer more favorable short entries. We will continue to eye momentum triggers for entry while noting that a topside break of the descending channel formation off the monthly highs would likely be a larger interruption in this particular setup. Note that we have been playing Kiwi weakness by way of the EUR/NZD setup highlighted in Tuesday’s report, which looks much cleaner from a technical standpoint. Although a similar setup can be observed on the AUDUSD, the magnitude of the shift in momentum continues to favor the Kiwi for now until Aussie price action offers further clarity on the reversal off key technical resistance at 9714/40.
* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.
Key Threshold Grid
Entry/Exit Targets
Timeframe
Level
Significance
Resistance Target 1
30min
8360/67
50% Retrace & 23.6% Fib Ext
Resistance Target 2
30min
8408
38.2% Retracement
Resistance Target 3
30min
8435
September High / Pivot
Bearish Invalidation
Daily / 30min
8457/63
23.6% & 61.8% Retrace / 38.2% Ext
Break Target 1
Daily / 30min
8495 – 8500
1.618% Fib Ext / Psychological Level
Break Target 2
Daily / 30min
8543/46
Monthly High / TL Resistance / 50% Ext
Break Target 3
Daily / 30min
8564
88.6% Retracements
Break Target 4
30min
8585
Late April Swing High
Break Target 4
Daily / 30min
8630/34
61.8% Ext / 2013 Close High / 2011 TL Res
Support Target 1
Daily / 30min
8330/40
23.6% & 61.8% Retrace / 61.8% Ext
Bullish Invalidation
Daily / 30min
8298 / 8300
78.6% Ext / TL Support
Break Target 1
30min
8257/67
78.6% Retrace / 100% Fib Ext
Break Target 2
30min
8230
10/10 Low / Soft Support
Break Target 3
Daily / 30min
8180 / 8214
50% & 38.2% Retrace / 200DMA / Oct Low
Break Target 4
Daily / 30min
8160
August High / Multi-Month Pivot
Break Target 5
30min
8142
1.61.8% Fib Extension
Average True Range
Daily
88
Profit Targets 20-22pips
Other Setups in Play:
EURAUD Breakout Seeks Validation- Scalps Eye 1.4340 Resistance
EURNZD Long Range Scalp Eyes Resistance- Bullish Above 1.6055
USD at Support Ahead of NFPs- GBP, AUD & Gold Scalp Biases in Focus
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—Written by Michael Boutros, Currency Strategist with DailyFX
For updates on this scalp and more setups follow him on Twitter @MBForex
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