Weekly
• Last Candlesticks pattern: N/A
• Time of formation: N/A
• Trend bias: Up
Daily
• Last Candlesticks pattern: Long black candlestick
• Time of formation: 1 Aug 2017
• Trend bias: Up
NZD/USD – 0.7237
Kiwi’s stronger-than-expected retreat from 0.7558 signals a temporary top has been formed there, hence consolidation below this level would be seen with downside bias for retracement of recent upmove, hence further weakness to 0.7201 support is likely, however, a daily close below this level is needed to add credence to this view, bring subsequent fall to 0.7145-50, then towards the lower Kumo (now at 0.7082) which is likely to hold from here due to near term oversold condition and bring rebound later.
On the upside, whilst initial recovery to 0.7300 cannot be ruled out, reckon upside would be limited to the Tenkan-Sen (now at 0.7345) and the Kijun-Sen (now at 0.7380) would hold, bring another decline later. Above 0.7390-00 would suggest first leg of decline form 0.7558 has ended instead, risk a stronger rebound to 0.7440-50 but upside would still be limited and price should falter well below said resistance at 0.7558, bring another retreat later this month.
Recommendation: Sell at 0.7370 for 0.7170 with stop below 0.7470.
On the weekly chart, as kiwi’s retreat from 0.7558 has kept price under near term pressure and 3 consecutive black candlesticks look set to be formed, suggesting top has possibly been formed at 0.7558, hence downside risk remains for retracement of recent upmove and a break below the Kijun-Sen (now at 0.7188) would add credence to this view, bring further fall to the upper Kumo (now at 0.7147) and then 0.7090-00 but reckon downside would be limited to the lower Kumo (now at 0.7026) and psychological support at 0.7000 would hold from here.
On the upside, expect recovery to be limited to 0.7300-10 and the Tenkan-Sen (now at 0.7379) should hold, bring another decline later. Above 0.7417 (last week’s high) would risk a stronger rebound to 0.7490-00 but still reckon said resistance at 0.7558 would limit upside and bring another retreat later. Only a break of 0.7559 would extend medium term erratic upmove from 0.6074 (2015 low) has resumed and may extend gain to 0.7690-00 (61.8% projection of 0.6074-0.7485 measuring from 0.6818) and later towards 0.7780-85 (61.8% Fibonacci retracement of 0.8836-0.6074), however, reckon upside would be limited to 0.7890 and price should falter well below resistance at 0.8035.
