The last time we were looking at NZD/USD on the blog, we had the US Dollar ripping faces off into resistance and the Kiwi hovering into daily support of its own.
Now neither of these technical levels held cleanly due to a whole raft of fundamental factors driving price, so I’ve taken the opportunity to shift the horiztonal level that we have in play on the Kiwi daily chart that we’re taking a look at again today:
This sort of textbook trend line break and retest setup often looks better than they actually perform. The old adage of “if it’s too good to be true, then it often is”, certainly rings true here.
Either way, the break and retest of the trend lines that we had been watching for a while now is worth bringing up because even if it doesn’t hold as a trend line retest of previous support as resistance, the horizontal level is going to be significant going forward in having a level to manage our risk around if we play from the long side.
Once again, this is not the type of setup that you would blindly short into. It is way too subjective and if you read this blog, you know we are all about waiting for a lower time frame confirmation before we would look to enter.
First scenario: With this nice lower time frame resistance zone formed by all these spikes, what I’m watching for is a fake-out and THEN the possibility to short if we see weakness.
Backup scenario: If momentum rips through the trend line, then we can use the horizontal zone as a level to manage our risk around if we then expect price to tuck back into the trend line and reactivate it as support.
Do you see opportunity trading NZD/USD? Trade with Australian regulated forex broker, Vantage FX.
Dane Williams – @VantageFX
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