FxWirePro: NZD/USD consolidation phase turns weaker at 50% Fibos from major trend bottom, breaks below 38.2% - Uphold tunnel spread for trading

On dailies, the current prices slide below 21DMA that signal more weakness in this pair.

A shooting star plugs in at 0.7282 levels, i.e. right near consolidation phase (near 50% Fibos from the bottoms of major downtrend reversal), we now foresee more price declines as it also breaches below 38.2% Fibonacci levels on monthly terms.

In our recent technical write up on this pair, we’ve already stated the formation of shooting star candlestick patterns at peaks of 16-months highs which is bearish in nature (at 0.7318 levels on weekly chart and 0.7282 levels on monthly terms). Please note that this bearish pattern has occurred at 50% Fibonacci retracements from the bottoms of 0.6196 levels.

To substantiate this stance, RSI and Stochastic oscillators on both daily and monthly graphs are suggestive of further declines as they evidence downward convergence to the price dips, so previous consolidation pattern now seems to have exhausted at this level as the central banks’ monetary policy changes in both NZ and the US continents to stimulate this bearish pressures. 

While %D crossover at 80s which is overbought zone on monthly plotting have been convincing that the selling momentum is still strong. Weekly MACD is also substantiating the same as the downtrend likely to prolong.

NZDUSD has fallen 3c since the US election, about the same as the immediate Brexit reaction.

It is poised to fall much further, technicians closely watching a neckline at 0.7060. If that breaks, charting textbooks point to an additional 4c fall.

Hence, considering above technical reasoning, one can eye on fresh short build ups snapping every rally for targets of 0.7049 and 0.6946 levels upon breach of the 1st target, maintain a strict stop loss of 0.7306 levels.

Alternatively, we also see tunnel spreads which are binary versions of debit put spreads as the best intraday trading opportunity. This strategy seems to be the best suitable on speculative grounds for certain yields but with leveraging effects. This is just for an intraday trading perspective, but in long run, this is certainly not yet an ideal time for fresh longs.