NZD/USD Spotlight: Indicator of the Day


[B]Nzd/Usd:[/B] Over the past several years we have grown quite comfortable with candlestick analysis because of its ability to provide a clear picture of developments within price action. One of our favorite indicators is simply looking at price action on a given day to help better understand what exactly the markets could be telling us. In the above example, we can see that price action is starting to look bearish and could be warning of a short-term top. After rallying sharply for four consecutive days, the market has finally stalled out on Wednesday, unable to post a fresh higher high above Tuesday’s 0.6600 2009 high, and subsequently breaking back below Tuesday’s low. This sets up a potential bearish reversal day (contingent on a negative close), that could open the door to a more significant drop over the coming days. The market is telling us that it no longer wants to continue with the current trend after failing to establish fresh highs, which forces a pullback and triggers stop-losses below the previous daily low to provide added confirmation and likely spark additional profit taking on longs along with fresh sell interest.

[B]Written by Joel Kruger, Technical Currency Strategist for
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