FxWirePro: NZD/USD bulls bounce-back with hammer at neckline of triple top, shooting star counters – Trade one-touch calls and short hedge

On daily plotting of NZDUSD, the price in minor trend has spiked above DMAs after bullish engulfing candle at 0.6987 levels.

For now, despite prevailing rallies, shooting star pops at 0.7033 levels to counter-rallies, rallies likely to extend further on bullish DMA crossover and sustenance of bullish momentum.

While on monthly terms, the bears in the major trend are extending triple top formation. Evidently, steep slumps are observed below EMAs, on the contrary, hammer pattern candle counters at the neckline of this bearish pattern chart formation, both leading & lagging indicators indecisive but bearish bias.

The triple top formation with top1 at 0.7485, top2 at 0.7558, 0.7437 levels and neckline at 0.6780 levels, the breach below neckline seem most likely contemplating the prevailing momentum and the trend sentiments.

Momentum study: Both leading oscillators (RSI & stochastic curves) have been showing upward convergence along with the ongoing price rallies to signal bullish momentum on daily terms, these indicators have been in bearish favor on a broader perspective.

Trend study: While MACD’s bullish crossover signals upswings to prolong further.

Next strong support levels are observed at 0.7015 marks and stiff resistance is observed at 0.7062 levels.

Contemplating above technical rationale, one-touch call options are advocated using upper strikes at 0.7062 levels. This speculative derivative instrument is likely to fetch magnified yields than spot trades.

In our earlier posts, we’ve advised short hedges using futures contracts of mid-month tenors with a view of arresting bearish risks, these short positions seem to have been instrumental in serving the purpose.

Overall, as the US dollar finally came to life in the recent past, bears are pushing NZDUSD below its 4-month lows. If it sustains the break below 0.6950 levels (21DMA), then a further decline towards 0.6850 is on the cards.

Currency Strength Index: FxWirePro's hourly USD spot index is displaying shy above -104 levels (which is bearish), and NZD at 46 (bullish) while articulating (at 08:41 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

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http://www.fxwirepro.com/invest