FOREX Chart Of The Day: NZDUSD Forms Bearish Pattern
Is NZDUSD bull run about to end?
As the USD Index bounces from the key $92.00 level discussed in our Forex Market Outlook.
We take a look at NZDUSD as the price forms a bearish pattern.
Watch the video to learn more…
Hi, and welcome to this Blueberry markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to go through NZD/USD prices at a key resistance level. But essentially, we’re just going to start here with the US Dollar index.
Yesterday, in the Forex Market Outlook, we discussed the fact that 92 US Dollars is going to be a pretty big level on the US Dollar.
We need to prepare ourselves if the market is going to head towards there early in the session and bounce from that point, or wait for the breakout to the downside. It looks to me that we’re getting the bounce at the moment because the price went right down into that 92 US Dollar level. It broke past those previous lows, and at the moment, we are setting up for a large bullish engulfing candle. That’s suggesting that buyers are very much in and around this level down through here.
So, we’re looking for some potential upside, maybe to trade back within this range that we’re seeing on the US Dollar index currently. Just to kind of note as well, there’s a little bit of bullish divergence here with the price making a lower low. The price is making the RSI make a higher low here, and so it’s suggesting that we’ve got some divergence there at a key supporting point. We said 92 is going to be a big deal for the US Dollar, and it looks to be that way.
So going into Kiwi, we can see that the price is at a key resistance zone on the weekly timeframe, it rejected this area a number of times in 2018 and the end of 2000 well started 2019. The market rejected it to the downside. Are we going to get something similar here again where the market breaks away from this level? Maybe it even pulls back into the previous weekly structure. If that’s the case, then we’ve got a good few pips to grab out of this. Because we’re sitting around 6900, and this level down here is in the 6700. So we’ve got a couple of hundred pips to work within and around this area if the price does decide it wants to do a pullback.
Now looking at the daily timeframe again, we’ve got this pattern up here where the market is making higher highs, and the RSI is making lower highs. So just to highlight that, you can see that here, like so. It’s getting a bit of a rejection candle in here at the moment. Now what’s quite interesting is that if I go to the four-hour timeframe, we have a nice consolidation pattern going on where the price is just squeezing to the upside, through here. So, this squeeze pattern that we typically see at the top of trends where the market starts to make nice moves to the upside is the price squeezing, and then we get a little bit of a breakout.
We had a similar effect here where we have this channel into the resistance right to the downside. So, we can look for something similar here on Kiwi. Maybe a break of this trend line support and these key lows that we’ve got just down here around 68-70. If the price can break through that then retest, I think we’ve got a good opportunity to get short on NZD/USD towards this 6800 level, just through here. So keep an eye on Kiwi. The price is currently pushing into this consolidation pattern at the top of a trend. If we do get that breakout to the downside, look for a clear close below 68-70. If we do get closes below, then we’ll look to action some potential short positions into this 6800 level.
Keep an eye on that, and I’ll speak to you soon.
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