NZD/USD Finally Starts Bouncing Off 76.4%
20 March 2009
Over the last few weeks this market has been grinding lower, on its approach to a long term 76.4% level. Now tested, the reaction has so far been positive – we have an initial bull signal in place now.
MONTHLY CHART: The structure of the chart had looked mature to us in the weeks preceding the eventual test of the 76.4% retracement. This is a good technical level from which to see a recovery phase starting. Note that AUD/USD had already tested and tried bouncing off its long term 76.4% level.
DAILY CHART: In Tuesday’s FX Trading Guide we said that a close above the 0.5446 09-Feb high would be a bull trigger – and that, in fact, a close above the small bear channel top projection would enough. This has happened and, as in AUD/USD, our stance is bullish now. But note near resistance from 0.5651/74 area, 23-Dec low and 23.6% level – this could prompt a s/term pullback, a chance for buyers on dips. A higher channel top projection around 0.5800 offers future resistance too, ahead of the 0.6160 38.2% level. Buyers on dips would want initial stops below 76.4% of the upleg from 0.4890, then targeting the 0.5674/0.5800 area for partial profits, ahead of 0.6160. We do not want the 0.4890 04-Mar low to break now.
Note: We have been bullish of EUR/USD in the FX Trading Guide for nearly two weeks now. After last week’s Update on this market our initial targets have been quickly met and exceeded. We now have a higher target which will be detailed in next week’s Guide.
Next story:
Is gold ready to go? 
Previous story:
Crude Oil Bulls Awake After $50 Break