Technical Analysis – NZDUSD’s negative momentum gains new confidence

Anthony Charalambous, XM Investment Research Desk

NZDUSD is presently tackling the 0.5841 level, that being the 38.2% Fibonacci retracement of the down leg from 0.6447 to an 11-year low of 0.5468, after new-found negative sentiment sent the pair back into the Ichimoku cloud. Aiding this move down is the recent bearish crossover of the now declining Ichimoku lines.

The short-term oscillators are providing extra backing towards a negative picture. The MACD has slipped below its zero and trigger lines, while the RSI is falling in the bearish zone. Moreover, the stochastic lines are shifting slowly into oversold territory. That said, the recent bullish overlap of the 100-period simple moving average (SMA) by the 50-period one could be tilted in favour of buyers.

If sellers manage to guide the pair past the 38.2% Fibo of 0.5841, initial hindrance could come from the 0.5776 obstacle and the lower band of the cloud, marginally beneath. Falling further, if the bears dive below the 0.5738 swing low and the 23.6% Fibo of 0.5700, their efforts to return to the 11-year low of 0.5468 could be challenged by the 0.5612 – 0.5590 area of troughs.

Alternatively, if buyers resurface and push above the 100- and 50-period SMAs at 0.5900 and 0.5924 respectively, initial resistance could come from the 50.0% Fibo of 0.5957 and the nearby high of 0.5981. Should buying confidence increase above the 61.8% Fibo of 0.6074, the 200-period SMA at 0.6102 could come in defence ahead of the 0.6160 barrier.

Summarizing, the near-term bias looks to be realigning with the short-term negative outlook and a close below 0.5738 could strengthen that view.