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The New Zealand may be setting a double top against its US namesake after prices put in a Bearish Engulfing candlestick pattern below resistance at 0.8745, the April 10 high. Near-term support is at 0.8607, the 23.6% Fibonacci retracement. A daily close below this barrier exposes the 0.8500-13 area, marked by the 38.2% level and the October 22 close. Alternatively, a reversal above 0.8745 targets rising trend line resistance at 0.8795.
Prices are too close to relevant support to justify a short position from a risk/reward perspective. We will remain on the sidelines for now, waiting for a more actionable trade setup to present itself.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com