NZD/USD Technical Analysis: Support Under Fire as RBNZ Nears
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NZD/USD Technical Strategy: FLAT
- New Zealand Dollar at lowest in almost 3 years on dovish RBNZ, risk aversion
- RSI divergence on near-term charts hints at bounce before down move resumes
- Upswing sought as opportunity for short trade, waiting for setup to take shape
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The New Zealand Dollar may have scope for a corrective recovery before resuming the four-month down trend against its US counterpart. Downside momentum has stalled after prices plunged to the lowest level in close to three years, undone by the combination of a dovish RBNZ and global risk aversion.
As it stands, near-term support is marked by the 50% Fibonacci expansion at 0.6505. A daily close below that exposes the 61.8% level at 0.6422. Alternatively, a turn back above the 38.2% Fib at 0.6589 paves the way for a test of the 0.6688-0.6738 zone (former range floor support, falling trend resistance).
Turning to shorter term positioning however, the four-hour chart reveals signs of positive RSI divergence. This hints that bearish momentum may be ebbing, which might precede an upswing. Provided the broader bounds of the downtrend remain intact, such a move might translate into a selling opportunity.
In the meantime, opting for the sidelines seems most prudent. If the bounce materializes, price action will be closely monitored for signs of exhaustion to identify potential short trade entry points. If sellers reclaim the initiative without a preceding move higher, that too will be considered for its trade potential.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.