Time to Buy the Kiwi
01/16/2009 10:31 am EST
Despite the overriding and very prominent downtrend, strong evidence of basing has now emerged with the pair finding support by 0.5195 in mid-November. Daily studies are looking overdone following four consecutive negative closes, and the latest setbacks have now stalled out just ahead of the critical 0.5195 trend lows, before reversing back towards daily opening levels.
The result has been the formation of a potential bullish daily hammer, which would suggest more upside over the coming days. However, Thursday’s high at 0.5455 would need to be taken out to confirm the reversal structure and shift the focus back on the topside.
Yesterday’s price action also keeps alive the hopes for a major inverse head and shoulders bottom. Look for the break back above 0.5455 to strengthen the inverse head and shoulders case and open fresh upside over the coming days back towards neckline resistance just over 0.6000.
By Joel Kruger, Technical Currency Analyst, DailyFX.com