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NZD/USD Rally Faces Potential Roadblock

Last updated 2/3/2009 12:56 PM EST (GMT -5) 0 Comments - Add your comment

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FX360 Technical Analyst Staff

Technical Analyst, GFT

Signs on the long-term point towards a bearish continuation of the NZD/USD as prices recently closed below previously established support near 0.5160 reaching a new 6 year low of 0.4960. We've since seen prices rally, and the 0.5160 level may now provide resistance on multiple Gartley pattern convergence.

On the 1hr NZD/USD, we have a nice AB=CD pattern developing and projected to complete at 0.5162. Interestingly, the 50% retracement of X2-A  and 61.8% X1-A both rest at exactly 0.5166, which in addition to the AB=CD pattern, define our two intertwined bearish Gartley patterns.

As a result, we're looking to short at 0.5159 with stops set just above X2 (also the 61.8% of X1-A) at 0.5229. Our initial profit target (T1) is currently set just above 38.2% of CD at 0.5112. If acheived, we'll adjust stops to break-even, and look for T2 at 0.5049. This setup does have longer term potential, but we'd need to see a close below point A (0.4960) so we'll keep you posted as this pattern develops...

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