NZD/USD - Head And Shoulders Short

New Zealand Dollar/U.S. DollarFXCM

Description

⋅ Oct 24, 2020 9:20 AM

FX:NZDUSD

The NZD/USD is forming a bearish Head And Shoulders on a daily chart.

The head of the pattern is itself a double top formed on a historical resistance line.

The right shoulder is currently at its completion point and there are signs that prove is starting to reverse.
More on that in the link below.

If the pattern is completed, price could move lower to around 0.6220.

Moreover, the MACD is loosing momentum while that pattern is forming - a strong bearish signal.

It seems that A LOT of signals are pointing towards the depreciation of the NZD against the USD

Comments

VincePrince

⋅ Oct 25, 2020 5:08 PM

Seems logical to me, thanks for sharing.

nadavhurwitz

⋅ Oct 25, 2020 6:12 PM

@VincePrince, I will update as it plays out.

Helena_FX

⋅ Oct 24, 2020 3:36 PM

Hmm, it does not look like a normal Head and Shoulder, more like a Double head. So who knows maybe the trend will try again to break that level - 0.67906? It is an up-trend at the end of the day.

nadavhurwitz

⋅ Oct 24, 2020 3:53 PM

@HrystiK,
I agree, it is not a normal Head and Shoulders. But, the overall idea of the pattern is similar in essence.

Regarding the trend:
1. I would argue that currently there is no trend. You do not have higher highs or lower lows - so the trend is sideways. This is according to classical Dow Theory.
2. If price action will break and close above 0.6790 an up-trend will resume.
3. If price action will break below 0.6514 we will enter a down-trend

On a 4-hour chart there are many signals indicating that prices could move down.
I believe it is a good setup for reversal when signals and patterns appear on multiple timeframes.