NZD/USD Bounce Off Critical Floor Sees A Piercing Line Take Shape

Talking Points

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  NZD/USD Technical Strategy: Shorts Preferred
  


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  Piercing Line Pattern Awaits Confirmation
  


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  Breach of 0.7730 Needed Open ’12 Low Near 0.7450
  

NZD/USD is in the process of producing a Piercing Line pattern on the daily after bouncing off the 0.7730 floor. The close of the current candle and an ensuing up-day would be required to suggest a base. However, within the context of a broader downtrend on the daily a sustained advance may prove difficult. A close below the pair’s recent lows would set the scene for a descent on the 2012 low near 0.7450.

NZD/USD: Piercing Line Pattern Awaiting Confirmation Near Recent Lows

Daily Chart – Created Using FXCM Marketscope 2.0, Volume Indicator Available Here

The four hour timeframe offered an early indication of exhaustion by the bears in the form of an Inverted Hammer. While considered a key reversal pattern follow-through may prove challenging in light of the broader bearish backdrop afforded by the daily.

NZD/USD: Inverted Hammer Suggested Bears Were Losing Their Grip

Four Hour Chart – Created Using FXCM Marketscope 2.0, Volume Indicator Available Here

By David de Ferranti, Currency Analyst, DailyFX

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NZD/USD Bounce Off Critical Floor Sees A Piercing Line Take Shape