The bullish trend appears to be firmly in place for NZD/USD as price trades to its highest level since October and along with the correct order of three key moving averages. In a strong bullish trend, price on the daily chart may display these moving averages in the following order: the 50 period Simple Moving Average on top, with the 100-day SMA in the middle and 200-day SMA at the bottom.
The bullish burst that occurred overnight is currently advancing to a bearish butterfly pattern and overbought conditions that may signal a slight round of profit taking. If price has a pullback toward the 38.2% Fibonacci retracement of the C to D leg, we may see bullish buyers return and eventually help take price to the .8550 region. If price corrects beyond .8390, major support will come from the 50-day and 100-day SMAs at around the .8300 handle.
The trade: Buy NZDUSD at .8390 with a stop loss at .8340 and a take profit at .8540. The Risk/Reward Ratio is 1:3.
Edward J. Moya
WorldWideMarkets Online Trading