NZD/USD Pulls Back; Breaks Above Falling Trendline

Forex Technical Update

NZD/USD 4H chart 3/6/2013 8:50AM EST

Bearish swing; Rising trendline break: The NZD/USD has been bearish since 2/15 from the 0.8530 high. Momentum started to be bearish in the 4H chart as the RSI tagged 30, then held under 60 in pull backs. The moving averages started to be in bearish alignment, but the fact that the 200-SMA is relatively flat means that there hasn't been any progression to the bearish trend yet, as it is only a single bearish swing from 0.8530 to 0.8190. Price  did break below a key rising trendline that went back to July 2012.

Pull back and falling TL break: After the break, the Kiwi found support at 0.8190 and pulled back above the broken trendline. As we get into the 3/6 US session, it is also trying to break above a falling trendline that came down from the 0.8530 high. The 50% retracement is at 0.8360 and 61.8% retracement is at 0.84. A pull back extending above 0.84 should be a very strong sign that the previous downside break was a false one. This scenario returns the outlook to the bullish side, with at least the 0.8530 high in sight.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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