Since the end of last month, NZD/USD has rebounded off the .8100 psychological level all the way towards the 50-day Simple Moving Average (SMA). Currently at a two-week high, price is trading within a bearish channel highlighted in yellow. Since the middle of September, the key trading range has been (.8100-.8500), price has recent formed a bearish Gartley pattern show in gray.
If we see a bearish pullback occur, traders may see the pair fall back towards the .8200 region. With little on the economic calendar for the rest of the day, we may see some sideways price action going into the evening. Tomorrow, we do not expect a change in rates from the Reserve Bank of New Zealand, but we may hear complaints of the highly overvalued kiwi and that might help spark the corrective move lower. Other economic indicators do support the RBNZ to raise rates next year, but a bearish reaction might be in the cards as the kiwi is becoming overly bought.
The trade: Sell NZDUSD at .8318, with a stop loss at .8368 and a take profit at .8218. The Risk/Reward Ratio is 1:2.
Edward J. Moya
WorldWideMarkets Online Trading