The NZD/USD pair is currently exhibiting signs of a potential bearish reversal, highlighted by the formation of a Bearish Butterfly Harmonic Pattern. This pattern, when combined with the key technical confluences identified, supports a strong bearish outlook for the pair in the short to medium term.
Bearish Butterfly Harmonic Pattern: The Bearish Butterfly Harmonic Pattern has formed near a critical resistance zone, suggesting a potential price reversal. The confluence of this pattern with the 78.6% Fibonacci retracement level on the weekly chart further reinforces the bearish sentiment. The harmonic pattern's completion at this juncture is a significant indication that the upside momentum may be waning.
Key Resistance and Trendline Confluence: Price has recently tested and rejected a key resistance level, which aligns with both the descending trendline and the 78.6% Fibonacci level on the weekly chart. This rejection adds credibility to the bearish bias, as it suggests that sellers are stepping in to defend this area.
RSI Divergence on 4-hour time frame: An additional layer of confluence is provided by the RSI divergence observed on the 4-hour timeframe. The RSI has shown a bearish divergence, indicating weakening bullish momentum. This divergence often precedes a trend reversal, further supporting our bearish outlook for NZD/USD.
Trade Plan: Given the confluence of these technical factors, the following trade setup is recommended:
Entry: 0.61970 Stop Loss: 0.62400
Take Profit Targets TP-1: 0.61540 TP-2: 0.61110 TP-3: 0.60680
Risk Management: This trade setup offers a favorable risk-to-reward ratio, with tight risk management in place. The stop loss is placed just above the key resistance level to protect against potential false breakouts.
Conclusion: The combination of the Bearish Butterfly Harmonic Pattern, key resistance rejection, trendline confluence, and RSI divergence points to a strong bearish case for NZD/USD. Traders should consider entering the trade at the specified levels, with a clear focus on the risk management strategy outlined above.
Disclaimer: This analysis is for educational purposes only and does not constitute financial advice. Please conduct your own research and consult with a licensed financial advisor before making any trading decisions.
Bilgiler ve yayınlar, TradingView tarafından sağlanan veya onaylanan finansal, yatırım, işlem veya diğer türden tavsiye veya tavsiyeler anlamına gelmez ve teşkil etmez. Kullanım Şartları'nda daha fazlasını okuyun.