FxWirePro: NZD/USD forms triple top in major trend, minor trend slides through sloping channel – Trade tunnel spreads and short hedge

As you could refer daily plotting of NZDUSD, the minor trend has been sliding through sloping channel.

Where the bears resume at the channel resistance, the occurrence of shooting stars at this juncture signals weakness, both leading oscillators indicate bearish momentum as current price slides towards 4-months’ lows, the bears extend again in the minor trend especially after the breaching strong support below 7DMA levels.

For now, more dips seem to be on cards as both leading oscillators substantiate the bearish momentum.

On weekly terms also you notice steep slumps after bearish EMA and MACD crossovers. It seems that the triple top formation is extending which is bearish in nature to signal weakness.

As the steep slumps below EMAs are observed, while both leading and lagging oscillators also substantiate bearish interests on this timeframe, the triple top formation seems most likely.

Momentum study: Both leading oscillators (RSI & stochastic curves) have been showing downward convergence along with the ongoing price dips to signal bearish momentum on both daily and weekly terms, these indicators have been in bearish favor.

Trend study: While MACD’s bearish crossover coupled with EMA’s bearish crossover. 7 and 21 EMAs have also shown bearish crossovers that signaled downswings to prolong further.

Next strong support levels are observed at 0.6811 areas (i.e. neckline of the triple top).

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 0.6893 levels (21SMA), then a further decline towards 0.6850 is on the cards.

One trading grounds, one can construct tunnel spreads using upper strikes at 0.6904 and lower strikes at 0.6870 levels.

Currency Strength Index: FxWirePro's hourly USD spot index is displaying shy above 104 levels (which is highly bullish), and NZD at -14 (neutral) while articulating (at 07:45 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