NZDUSD still on right track to high probability setup
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.
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?
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.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.
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