Over the past couple of months, I was bearish kiwi dollar because of concerns of slowing growth from China, stable rates likely to remain in place by the Reserve Bank of New Zealand and because of the strengthening US dollar. Overnight, NZD/USD continued its accelerating slump after the RBNZ announced they intervened in the forex market by selling NZ$521 million in August. The daily chart shown above displays relentless weakness that has produced over a 4.0% drop this month. Currently price is tentatively finding some support from the low made last summer around the .7700 handle.
The bearish trend is firmly in place but many will expect the central bank to continue its intervention efforts. The 15-minute chart displays that price may form a potential bearish Gartley pattern around the .7800 handle. If valid, we may see price make another to retest the lows from last night.
The trade: Sell NZDUSD at .8200 with a stop loss at .8235 and a take profit at .8130. The Risk/Reward Ratio is almost 1:2.
Edward J. Moya
WorldWideMarkets Online Trading