The NZDUSD has rallied from its most recent lows and formed a rising wedge formation as visible in this H4 chart. The pair currently trades at the upper resistance level and the two most recent candlestick patterns formed a hammer as well as inverted hammer formation which are both two extremely bearish signs given their position.
MACD has formed a negative divergence and shows that momentum fades away. We expect this pair to breakdown into its 200 DMA. RSI has reached overbought territory and formed a negative divergence as well.
We recommend taking a short position at 0.8250 with a potential second entry level at 0.8350. Should this pair breach 0.8300 to the upside we recommend hedging the initial short position with a long at that level before adding new short positions to this trade.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 0.8300. We never make use of stop loss levels and will execute this trade as recommended. Place your take profit level at 0.8190.