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NZDUSD still on right track to high probability setup

NZDUSD is still moving in the right direction predicted by a high probability setup first observed here and then updated here.

High probability reversal chart pattern on NZDUSD weekly chart from mid-July 2015 to present

This chart was published on 15 March | Source: MT4

NZDUSD weekly chart with head and shoulders

This chart was published on 19 March 2018 | Source: MT4

In my opinion the reported Head and Shoulders neckline was broken on 20 March – all 5 days of last week was spent consolidating like a pullback to neckline. A spike this Monday took price back above neckline (dead cat bounce) but now price is back down again. The current pattern looks like a Descending Triangle instead.

NZDUSD Head and Shoulders pattern morphed into a Descending Triangle

NZDUSD Head and Shoulders pattern morphed into a Descending Triangle | Source: MT4

Can chart patterns change? Yes they do from time to time. This is not the first and won’t be the last. What matters most is the big overhead resistance shaded pink remains intact, that a Descending Triangle still favours a reversal.

Why was there a spike on Monday then?

My guess is there was quite a bit of anticipation that the PetroYuan crude oil futures that started trading in RMB on Monday 26 March 2018 at the Shanghai International Energy Exchange was going to be a game changer for the USD. So on Monday USD was sold down while CNH, EUR, WTI, XAU and many others including NZD rallied. When market realised no new level was broken except USDCNH, USD was bought very quickly which explains black Shooting Star-like candlesticks we are seeing at weekly timeframe on many pairs right now. Did bulls get washed and rinsed?

Shooting Star candles in 4 pairs

Shooting Star candles in 4 pairs | Source: Tradingview.com

Interesting WTI could be a potential Double Top on the weekly chart especially if DXY continues to strengthen while XAUUSD also looks like a Triple Top. Is my long-awaited DXY rebound coming? WTI and XAU have inverted correlations with DXY but this is a story for another post.

7Shares

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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