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Today’s Trading Edge: NZD/USD Prepares for a Sharp Pullback

Posted by Edward Moya on Nov 28, 2013 8:36:00 AM

WWM NZDUSD Nov28 2013

Since the end of last month, commodity currencies have not showed any substantial rallies against the U.S. dollar.   Last week, we heard complaints from Reserve Bank of New Zealand Assistant Governor John McDermott that the kiwi is overvalued and fear that potential action may come down from the central bank is providing traders some hesitation jumping back into long positions for the rest of the year and possibly the first quarter of 2014.   

Price action on the 30-minute chart above displays a potential bearish Gartley Pattern forming around the .8190 level.  If valid, traders may see a sharp pullback targeting the psychological .8000 handle.  This technical pattern typically provides often an immediate reaction once filled.  If price does not hit our trigger price by the end of the day, this pattern may be invalidated.   

The trade: Sell NZD/USD at .8190 with a stop loss at .8220 and a take profit at .8060.  The Risk/Reward Ratio is 1:4. 

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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