NZDUSD Technical Strategy: BEARISH
- NZD cautiously drifts to eight-month low near 0.65 figure vs. US Dollar
- Daily close above near-term trend line needed to neutralize bearish bias
- Monthly chart reveals prices are challenging 19-year trendline support
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The New Zealand Dollar has drifted to an eight-month low against its US counterpart. Prices are now testing support in the 0.6476-0.6501 area, with a break below that confirmed on a daily closing basis opening the door for a challenge of the October 2018 swing bottom at 0.6425.
Resistance is marked by a falling trend line guiding NZDUSD lower since late March, now at 0.6546. A sustained break above this may neutralize near-term selling pressure, setting the stage for a retest of support-turned-resistance in the 0.6591-0.6619 zone.
Staid day-to-day price action masks the pivotal moment at hand however. Zooming out to the monthly chart reveals prices to be sitting squarely at support marking an almost 19-year rising trend. With just over a week left in the month, the threat of a breach confirmed on a closing basis seems acute.
Needless to say, this would mark a tectonic shift in the long-term NZDUSD trajectory. The next major inflection point is found just below the 0.60 figure, with subsequent weakness beyond that opening the possibility of a descent all the way to decade lows below the 0.49 threshold.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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