Technical Analysis – NZDUSD is back to multi-month lows; negative momentum prevails

NZDUSD is recording another day of losses after a failed attempt to break significantly above the 0.6395 resistance level and the short-term descending trend line.

Chances for a reversal, however, are decreasing as the 20-day simple moving average (SMA) dropped below the 40-day SMA, while the red Tenkan-sen line has a steeper negative slope now, suggesting that the next move in the price is more likely to be down. The MACD continues to strengthen to the downside and below its red signal line, supporting this view as well.

Another step lower may reach a key support at the 25-month low of 0.6195, where the price stopped on June 15. Should this prove a weak obstacle, the selling could pick up speed until the April 2020 inside swing high at 0.6170, where any violation would bring more pressure to the market with the price probably stretching further down to test the 0.5920 mark, taken from the bottom on May 2020.

Alternatively, in case of a rebound, immediate resistance could come from the 20- and the 40-day SMAs at 0.6345 and 0.6370 respectively, which stands around the downtrend line and the 0.6395 resistance. Higher, the Ichimoku cloud and the 0.6570 barrier could also restrict upside movements, though only a close above the 0.6725 line and the 200-day SMA at 0.6740 would confirm the start of an uptrend.

In the longer-term picture the pair is still increasingly bearish as long as it holds below the falling trend line and more importantly well below the 200-day SMA.

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