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NZD/USD: Bearish engulfing candle at a double top resistance, what’s next?

EagleFX

NZD/USD has been choppy in the daily chart for several days. The price had a rejection at a level of resistance and produced a bearish engulfing candle. If it makes a breakout at the candle’s lowest low, the sellers may go short in the pair and drive the price towards the South further. Major intraday charts show that the price has been in a bullish correction. Upon finding its resistance, it may create bearish pressure and head towards the downside. Let us now have a look at three vital charts.

Chart 1 NZD/USD Daily Chart


The chart shows that the price had several rejections at the level of 0.66985. It produced a bearish engulfing candle earlier. However, the price did not continue its move towards the South. It had a bounce at the level of 0.65900 and headed towards the North again. The chart produced another bearish engulfing candle at the same level. If the price makes a breakout at the level of 0.65900, it may attract the sellers to go short in the pair and drive the price towards the South further. The price may find its next support around 0.64800.

Chart 2 NZD/USD H4 Chart


The chart shows that the price made a strong bearish move and made a breakout at 0.66275. The pair is trading below the level. It had a bounce at the level of 0.65900 and produced two doji candles. It may head towards the North. The level of 0.66275 may work as a level of resistance. If the level produces a bearish reversal candle, the sellers may go short below 0.65900 and drive the price towards the South. The price may find its next support around 0.65230.

Chart 3 NZD/USD H1 Chart


The chart shows that the price after being bearish had a bounce around the level of 0.65900 twice. At the last bounce, the price produced a bullish inside bar and headed towards the North. The level of 0.66100 may work as a level of resistance. If the level produces a bearish reversal candle, the sellers may drive the price towards the level of 0.65900. A breakout at the level of 0.65900 may create more opportunities for the sellers to go short in the pair. The price may find its next support around the level of 0.65470.

The daily chart is bearish biased, but it needs time to get very bearish. However, the H4 and the H1 chart seem to be ready to offer short entries to the sellers with excellent risk-reward. Considering these three charts, the pair may end up producing another bearish candle in the daily chart.

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