Technical Analysis – NZDUSD maintains bearish picture; gains halted

Technical Analysis – NZDUSD maintains bearish picture; gains halted

Technical Analysis – NZDUSD maintains bearish picture; gains halted

Anthony Charalambous, XM Investment Research Desk

NZDUSD bulls reemerged, overtaking the resistance of 0.6268 and the 50-period simple moving average (SMA) on the four-hour chart. However, the rally which commenced on October 1 off a multi-year low of 0.6200 soon came to a halt at the lower boundary of the Ichimoku cloud presently at 0.6298.

The short-term oscillators suggest that positive momentum is picking up. The MACD has distanced itself above its red trigger line in the negative region, while the RSI has inclined off the 50-level into bullish territory. Despite this, the negative signals from the 100- and 200-period SMAs, as well as the restricting Ichimoku cloud, warn traders to be cautious.

If sellers retake control, initial support could come from the 50-period SMA ahead of the 0.6268 support. Slightly lower, the Tenkan-sen and Kijun-sen lines could apply some hindrance before a retest of the 2015 low of 0.6235. If selling orders further pick up, the more significant support region of 0.6200 – 0.6194 could come into focus, framed by a psychological number and a level not seen in more than 10 years.

In the positive scenario, moving through the Ichimoku cloud, the 100-period SMA and the neighboring resistance of 0.6320 could challenge the bulls. Overcoming this, the rally may extend to the 0.6340 level, which is the 23.6% Fibonacci retracement of the down leg from 0.6789 to 0.6200 and where the 200-period SMA lies. Climbing above the 0.6360 swing could open the door for the swing peak of 0.6445.

Overall, NZDUSD remains bearish in the bigger picture, while in the short-term, a close above 0.6360 is required to turn the short-term bias from neutral to bullish.


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