We have an interesting technical picture unfolding on the NZD/USD at the moment. From the daily timeframe, it is evident that the currency pair has been underwater for the majority of this year. In fact, year to date, we are lower by -6.6%.

Further Selling?

Favouring bears at this point is the downtrend shaped by a series of lower lows and lower highs since topping at $0.6369 and the fact that this week saw the unit push through bids at ascending support taken from the low of $0.5512. As you can see from the chart, price is testing the underside of the ascending base, as we write.

Bullish Recovery?

Evidence is also building for buyers. The pair is on the verge of finishing the day with a bullish outside reversal candle off a Quasimodo support level from $0.5860. Couple this with a neighbouring potential reversal zone (PRZ) derived from a harmonic bat pattern between $0.5792 and $0.5854, and buyers have a reasonably solid basis to begin considering a bullish scenario.

Conservative Approach?

Nevertheless, many traders will likely adopt a conservative approach in this market. For buyers, commitment may be thin until a close back above the ascending support-turned-potential resistance is seen. Similarly, sellers are likely to be reluctant to pull the trigger until the harmonic bat pattern’s PRZ is cleared.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.