22 Jul 2015



The rate failed the pennant set-up, I mentioned yesterday, however, what we see now is a possible bullflag scenario coming into play.

The broad strokes for the trade still remains the same. A break above 2.0325 should trigger the move towards the flag breakout targets at 2.0600 and 2.0900.

A break below 2.0125 would invalidate the bull flag scenario as it would mean a probable move towards the rising trendline around 1.9850.


The rate is trading in a very tight range just below the major broken trendline support. A break below 91.00 would work as a good indication that there has been a polarity change as the old support becomes the new resistance and should take the rate down to at least 89.20.

A daily close above the falling gap resistance at 92.50 would invalidate my immediate bearish bias on the pair and may start a move towards 95.00.


The technical picture on this pair shows a possible head and shoulders formation. Be warned that traders are waiting for the RBNZ rate decision later tonight and in case of a premature break it is not to be traded.

If, however, the RBNZ decides to leave rates at the current level (3.25%), a break below the neckline at 1.6350 would most likely take the rate down to the rising gap support at 1.6000 with a lot of momentum, as traders have already priced in the rate cut.


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