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Today’s Trading Edge: NZD/USD – Kiwi Advances to Bearish Butterfly Pattern

Posted by Edward Moya on Mar 6, 2014 9:14:00 AM

WWM NZDUSD MAR 6 2013

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

Technical Strategist

WorldWideMarkets Online Trading

 

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