By: Mike Kulej
The NZD/USD recovered some of its recent losses, after a fall from 0.7300 to 0.6550. During a span of a week, this pair advanced back to just over 0.7000 in a rather fast move. This level was reached yesterday but it did not hold and the price retraced swiftly, creating a variation of a “shooting star”, one of the more reliable of candlestick patterns.
A shooting start is a reversal formation, suggesting increased probability for a trend to change direction following the pattern. This means that based on the candlesticks, the NZD/USD could resume its previous downtrend.
Other technical indicators support this. The price reached the 50% Fibonacci retracement level, as applied to the main down swing, and almost touched the 62% level. Price reversals often take place at these levels. In addition, the 100 SMA is currently in this general chart area, providing additional resistance and reason for the NZD/USD to change its direction here. The fast Stochastics are also overbought, giving even more evidence to a possible trend change. If the price turns here, it could be expected to retest the last low of 0.6550.
NZD/USD- A Possible Trend Change
DailyForex.com