Early to mid last week saw a very bullish market with the kiwi gaining against the Dollar. Thursday and Friday’s price action showed momentum finally slowing down with small movement. The market did however form a bearish Hikkake pattern at the end of the week suggesting the early bulls could lose control to the bears in the coming days.
A look at the chart below shows the mentioned Hikkake pattern. The pattern is strengthened as it is showing a clear rejection of a strong S&R level sitting at 0.7800.
The Hikkake is again strengthened by a 50% swing retracement. A look at the chart below and we can see the market last week retraced 50% of its most recent down swing. The Hikkake pattern is formed just below this 50% which happens to sit just 50pips above our identified S&R level at 0.7800.
With the strong technical resistance sitting at 0.7800 and the 50% swing retracement its possible we may see the market continue its bearish momentum seen for much of the latter part of this year. Last weekend the Kiwi opened with a gap which as of yet has not been filled. Shorting the pair down towards the 0.7500 area (the Gap) could prove to be a profitable trade in the coming days/week.