NZD/USD Support Bounce Momentum Being Slowed

NZD/USD Key Points

• Daily support held after a 3 month bearish trend.
• Price bounced hard, forming a new intraday bullish channel.
• With the initial momentum of the bounce slowing down, it's now decision time.

NZD/USD Technical Analysis

Good morning team!

After not being able to write a technical analysis price yesterday, it certainly feels good to be back at my desk and have my charts in front of me.

After a quick scan, there was only one forex chart that really stood out to me - NZD/USD.

The Kiwi!

Take a look at the higher time frame, daily chart below:

As you can see, price has bounced off support and after a nice little retest (I'll leave the intraday levels that price retested before ripping as research of your own), price ripped higher, HARD.

But with yesterday's daily candle showing that long wick, right as price pushes into previous swing low levels of support in the past, momentum is possibly slowing.

With that possibility in mind, let's now zoom into a lower time frame and take a look at the price action. Here's the hourly:

I've drawn an ascending channel on the hourly, but all we really need to pay attention to here is the lower trend line and the fact that price has broken through it.

With that break, we've got some visual confirmation that momentum is definitely slowing.

The question now becomes, how do we trade it?

Well, if you've ever had a trading conversation with me on Twitter, then you'd know that I'm all about the higher time frame being king.

In this case, the higher time frame chart above is telling us that the bounce above daily support is the most important factor in NZD/USD right now.

Don't trade against what the higher time frame is telling you, if you don't have to. It's like swimming against the tide at the beach.

Crazy!

What I'm going to do, is wait and see how price reacts if it gets back to the hourly swing highs and possibly forms a bit of a double top.

Only then would I get slightly interested in looking for an intraday short.

But right now with price only having broken through weak intrday support, against the direction of the higher time frame chart, I won't be rushing into any shorts.

Higher time frame is king! - Don't you forget that.

Best of probabilities to you.

Dane.

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