NZD/USD recently broke below the ascending trend line on its 4-hour time frame and dipped below the .8100 mark. However, weak data from the US and improved risk sentiment have allowed the pair to pull back to the former support level.
Stochastic is already in the overbought zone and is showing signs of heading lower. If Kiwi bears take control and risk appetite gets weaker, NZD/USD might fall back to its former lows.
Shorting at market with a stop above the trend line and a target of .8100 could yield as much as 3:1 return on risk. To protect profits, the stop can be trailed by 50 to 100 pips.
By Kate Curtis from Trader’s Way