Last week, we opted to remain on the sidelines in NZDUSD. Our suspicion of a bearish tone proved valid, as the pair broke out of its range between 0.7880 and 0.8100 to settle at the long term upward sloping support line established in September of last year. The test produced a Morning Star candlestick pattern, but bullish momentum failed to build – the candlestick following the Morning Star proved bearish, engulfing the body of the bullish one that preceded it.
Price action now looks to be coiling into a triangle formation. This is typically a continuation pattern, though it is far too soon to be certain on the timing of breakout. So far, it seems the bears retain the upper hand with the pair consolidating prior to a reversal lower. However, we do not have a confirmed signal to enter a trade.
NZD/USD Strategy
We remain flat as we wait for confirmation of a directional bias.
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