FxWirePro: NZD/USD slides below 21-DMA again, bears resume as shooting star appears at peaks of 16-months highs – Deploy tunnel spreads to discount rallies

NZDUSD has formed shooting star candlestick pattern at peaks of 16-months highs which is bearish in nature (at 0.7318 levels, see weekly chart).

As a result of the formation of this bearish pattern, the current prices have slid below 21-DMAs on daily charts and there is an attempt of slipping down below 7-EMA on weekly plotting.

Ever since the pair has been hitting the levels of 0.7384 levels, Kiwi dollar seemed like exhausted at this juncture from the last couple of weeks but for now “Shooting Star” pattern occurred to signify weakness.

On daily terms, the current prices keeping 21DMA as stiff resistance, one can think of shorting this pair. 

RSI and Stochastic oscillators on both daily and weekly graphs are suggestive of further declines as they evidence downward convergence to the price dips on daily, divergence on weekly shows previous consolidation pattern seems exhausted at this level. 

While %D crossover at 80s which is overbought zone on weekly plotting have been convincing that the selling momentum is still strong.

Hence, considering above technical reasoning, one can eye on option tunnel which is the debit spread of binary version.

In-The-Money tunnel would be formed of shorts of in-the-money binary put with shorter expiries below the current exchange rate less an Out-Of-The-Money longs binary delta put below the exchange rate.

We wouldn't be surprised if the spot FX drifts upto 30-40 pips below current levels of 0.7259 levels in no time or 20-25 pips on northwards in intraday terms.