The NZDUSD was one of the more active currency pairs in November. Following an impressive 250 pip rally leading up to the November 9th U.S. elections, the pair lost all bullish momentum and plunged over 400 pips in just nine sessions.
For those who have been following along, you’ll be familiar with the five-month head and shoulders we’ve been tracking. You may also be aware that yesterday’s session closed back above the neckline.
Here’s how things look from the daily time frame:
The confluence of support at 0.6970 was enough to trigger a nearly 200 pip surge. This rally was enough to take out former neckline support (new resistance) thus negating the reversal pattern, or so it seemed.
But during yesterday’s session, the pair slammed into former trend line support that extends from the January low at 0.6346.
Apparently, the 0.7150 area was so saturated with sellers that the pair appears to have closed back below the neckline near 0.7085.
This is somewhat questionable as it depends on where you draw the neckline. But regardless of your stance, there’s no doubting that yesterday’s candle is not conducive to sustained bullish momentum.
From here traders can watch for selling opportunities so long as the 0.7085 – 0.7100 area holds on a daily closing basis. Key support comes in at 0.6970 followed by 0.6840.
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