Market news
01.07.2024, 12:29

NZD/USD pulls back to neckline of topping pattern again

  • NZD/USD has pulled back up to the neckline of a topping pattern again. 
  • The move comes despite the pair making a new low on June 28. 
  • A close higher could invalidate the pattern and indicate a possible upside reversal.  

NZD/USD has recovered back up to the “neckline” of a complex multi-peak topping pattern that has formed since the middle of May. This is the second time NZD/USD has recovered back up to test the neckline, the level underpinning the pattern’s trough lows. 

NZD/USD 4-hour Chart 

NZD/USD first penetrated the neckline on June 26, falling to a low of 0.6068. However, it quickly mounted a recovery and returned back to the neckline on the following day. The pair then resumed its downside, however, falling to a new low of 0.6057 on June 28. Bears failed to maintain the downside momentum, however, and now the pair has recovered for a second time back up to the level of the neckline.

A recovery back up to the neckline of a topping pattern is called a “throwback” move in technical parlance. The fact that this has happened a second time is unusual and suggests waning downside momentum. It introduces a risk that the initial break lower may have been a false break and NZD/USD could now rally back above the neckline higher. 

The pair completed a bearish Shooting Star Japanese candlestick pattern during the last 4-hour period. If this is followed up by another bearish candle it would confirm a reversal pattern, and would suggest a move lower. However, candlestick patterns are very short-term indicators. A break below the June 28 low at 0.6057 would be required to confirm further downside, with the next target in a zone between 0.6028 (bottom of April 10 price gap) and 0.6015, the Fibonacci 0.618 extrapolation of the height of the pattern lower. 

A break above the 0.6108 highs on a closing basis would bring into doubt the bearish hypothesis and possibly indicate a recovery. A move above the 0.6149 (June 13 and 14 high) would invalidate the bearish pattern and probably indicate the birth of a new short-term uptrend. 

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location