Technical Analysis – NZDUSD positive impetus fades as 100-MA deters gains



NZDUSD has dipped back down to the 200-period simple moving average (SMA) after the pair’s recent bounce around the 0.6986 level was capped by the 100-period SMA. The horizontal 100- and 200-period SMAs are promoting an overall trendless bias, while the diving 50-period SMA, is suggesting a downward tendency in the pair.

At the moment the short-term oscillators are skewed more to the downside and are reflecting the pickup in bearish momentum. The MACD is holding marginally above its red trigger and zero lines, while the RSI is falling in negative territory. Furthermore, endorsing additional downward forces is the negative charge in the stochastic oscillator.

If the price manages to close below the support zone between the 0.7030 level, that being the 38.2% Fibonacci retracement of the up leg from 0.6804 until 0.7169, and the 200-period SMA at 0.7022, the bears may extend the drop to test the support section from the 0.7000 hurdle until the 50.0% Fibo of 0.6986. Additional deterioration in the pair beneath this defence, and simultaneously past the 0.6980 trough and lower Bollinger band could reinforce the decline to challenge the 0.6932-0.6943 obstacle. Should selling interest overpower, the bears may then target the 0.6903 barrier.

Alternatively, if buyers re-emerge and drive the price back above the 200-period SMA and the mid-Bollinger band around 0.7030, successive upside restraints could emanate from the 50-period SMA at 0.7055. From here buyers would need to muster the power to pilot the price over the tough resistance section from the 23.6% Fibo of 0.7083 until the 0.7100 mark. Successfully reviving upside momentum, the pair may then float the price towards the 0.7138 high before challenging the resistance boundary of 0.7152-0.7169, the latter being a two-and-a-half-month peak.

In conclusion, negative forces have yet to fully negate the soundness of the short-term positive structure. That said, to cement the bearish outlook in NZDUSD, the price would need to close below the 200-period SMA and the 0.6980 trough.

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