04 Mar NZD USD Analysis Ahead of Short Entry For W/C 5th March 2012
We’ve already discussed the Trending Characteristics of The New Zealand Dollar in this previous post analysing GBP:NZD so I’ll get straight to the point on this one.
NZD:USD is showing some fairly classic signs of a short term top on multiple time frames and although I don’t think price will play out quite like my annotated price projection, it gives an idea of what I’m looking for in the 4 hourly chart below.
Ideally a failed retest of those converging 20, 50 and 100 MA’s just above the current price will offer a nice short entry that would form the top of next Week’s Weekly candle. Note also the spike high that retested the upwards sloping trend line that had been broken through time decay and the down trending MACD. Market Tops on 4 hourly time frames are often formed in this way. The 200 MA is currently offering support so we need further confirmation before getting into a short trade just yet:
The Weekly chart also shows good signs of a topping formation noting and I’ve placed a fib retracement from the current high to find an ideal initial retrace target:
After presenting this Analysis on my ADVFN forum, another poster responded with some equally valid counter evidence suggesting NZD:USD should rally out of this consolidation and I think it worth bearing that possibility in mind.
That said, this chart detailing Commitment of Traders clearly shows smart Money is already very short (almost record short) which is another important sign of a pending pull back.
Chart courtesy of www.finviz.com
If the confirmation I’m looking for appears forthcoming as shown on the 4 hourly time frame, there’s a very good chance I’ll be entering a short position sometime over the next 48 hours.