NZDUSD bulls may have finally met their match. The ten-month trend line that failed on November 15th is now acting as resistance. This level was responsible for yesterday’s late-session selloff.
On Monday, I mentioned the idea that the 0.7170 area needs to hold on a daily closing basis. Otherwise, the bearish bias would be in question.
And although buyers won the battle early on Thursday, sellers did their part to taint the victory. As a result, the pair ended up closing off its session highs by 50 pips.
However, the daily chart didn’t quite produce a bearish pin bar. If anything I’d call it a bearish rejection. Whether or not that equates to a valid sell signal depends on your trading style.
But the fact that the pair failed to close the day above the 0.7170 area does suggest that sellers are beginning to take an interest. From here the 0.7185/90 area is likely to attract offers should buyers make another run at the ten-month level.
Also, keep in mind that the ascending channel I pointed out on Monday is still in play. This introduces a second more conservative option for those who remain bearish the NZDUSD. This is the option I prefer given the parade of false breaks we’ve seen throughout 2016.
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