Trade Recommendation: New Zealand Dollar

The New Zealand/US Dollar pair (NZD/USD) pair started its uptrend in May 2009 when it took out 0.6 resistance. The breakout signalled the end of the correction and that helped push the pair to as high as 0.88412 in August 2011. In a couple of years, the New Zealand Dollar gained over 47% against the US Dollar.

From that point, the market range traded between 0.75 and 0.88 until it broke below 0.75 support in January 2015. The price action triggered the double top reversal pattern on the monthly chart. Even though bulls tried to recover, bears sent the market into a freefall until it achieved the target of the double top pattern at 0.62357 in September 2015. NZD/USD has been rallying since, and it appears ready to resume its uptrend.

Technical analysis reveal that the New Zealand Dollar/US Dollar pair is poised to take out 0.75 resistance and trigger the large cup and handle pattern on the weekly chart. Bulls are in a very good position to complete the breakout after creating a higher low of 0.71523 in March 2018. In addition, RSI is far from overbought territory. The market has some room to complete the breakout before flashing overbought signals.

The strategy is to buy the breakout at 0.75. If bulls turn the resistance into support, they may use it to ascend to our target of 0.88. The process may take less than six months.

Weekly Chart of NZD/USD on Forex.com

As of this writing, the NZD/USD pair is trading at 0.73662 on Forex.com.

Summary of Strategy

Buy: Breakout at 0.75.

Target: 0.87

Stop: 0.73499 after the breakout.

 

Featured image courtesy of Shutterstock

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.

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