Despite the sharp selloff that took place in today’s Asian trading session and the double top pattern that formed on the short-term time frames, NZD/USD’s uptrend is still intact. The pair is currently testing the rising trend line on its 4-hour time frame, right around the .8600 major psychological support.
Stochastic has already reached the oversold zone but hasn’t crossed upwards yet, indicating that Kiwi bears are still in control at the moment. An upward crossover could indicate that the selling is done and that bulls are ready to charge.
Going long around .8600 if reversal signals show up and targeting the .8700 major psychological resistance could yield a high return on risk with a tight stop below the trend line.
By Kate Curtis from Trader’s Way