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New Zealand Rally Losing Steam?

Last updated 3/30/2009 2:31 PM EST (GMT -5) 0 Comments - Add your comment

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FX360 Technical Analyst Staff

Technical Analyst, GFT

The Kiwi has been on a bullish tear lately having climbed nearly 1,000 pips since bottoming out near 0.49 in late February/early March. Prices hit critical, converging Fibonacci resistance near 0.58 late last week, and gapped down on Sunday's open suggesting further near-term losses are a distinct possibility. The key seems to be support near recent lows around 0.56. Should this floor fail, a deeper bearish correction may ensue.

In terms of positioning ourselves for this potential dip, we've identified a bearish Gartley pattern developing on the 30min projected to complete near 0.5665 or 0.57. As such, we are looking to sell the NZD/USD at 0.5665 with stops set at 0.5707. Assuming the general consensus regarding overall USD devaluation, our initial profit targets sits just above 61.8% of CD at 0.5632 (T1) as we may see only a minor reaction to the projected bearish Gartley pattern. Should the earlier stated floor near 0.56 fall, our extended profit target will come into play currently set at 0.549--just above 161.8% support of the rally leading into point X.

4hr Chart - Break of bull trendline suggests a bearish correction, but not necessarily a reversal	30min Chart - Bearish Gartley pattern projected to complete at D

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