Technical Analysis – NZDUSD corrects higher after plunging to 3½-year low

Technical Analysis – NZDUSD corrects higher after plunging to 3½-year low

Technical Analysis – NZDUSD corrects higher after plunging to 3½-year low

Anthony Charalambous, XM Investment Research Desk

NZDUSD fell aggressively and logged 180 pips early on August 7. But the latest trickle downwards lasted for nineteen days before the correction by buyers. They pushed the price up and into a sideways structure, slightly below 0.6473, which is the 23.6% Fibo retracement level of the down leg, from a three-and-a-half-month high of 0.6789 to a low of 0.6376.

It is worth mentioning that the Tenkan-sen average has restarted moving down, agreeing with the 100-day simple moving average’s (SMA) bearish cross below the 200-day SMA. On the other hand, the Kijun-sen average has flattened with the RSI, which is beneath the trend line and neutral 50 level. The MACD and its red trigger line in the negative region have also flattened indicating the temporary momentum freeze.

With the 23.6% Fibo of 0.6473 applying resistance, the downside pressure could be rekindled and the pair could retest the recent 0.6376 low, before tackling the 3 and 1/2 -year low of 0.6345. If the selling interest persists a fourty-six-month low could then unfold.

In an upside scenario, the initial resistance region would be 0.6473 – 0.6487, which is made up of the 23.6% Fibo and the inside swing low. Moving higher, the 0.6534 resistance comes from the 38.2% Fibo and the falling 50-day SMA. Next, the 0.6556 Ichimoku cloud applies some pressure, before the 50.0% Fibo of 0.6583.

Summarizing, in the long- and short-term, the pair’s bearish bias is overwhelming, but a move above the 0.6650 level could turn the medium-term bias back to neutral.


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