NZDUSD Technical Strategy: BEARISH
- NZD recovery falters at chart resistance, prices sink back to late-May low
- Break of immediate support exposes 2018 low, resistance just below 0.66
- Long-term direction change may be triggered on 17-year trendline break
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The New Zealand Dollar lost upside momentum against its US counterpart upon testing a dense resistance bloc running upward through 0.6727, as expected. The currency has now erased all of the upswing from late-May lows and rests atop familiar support in the 0.6476-0.6501 area.
Breaking below this boundary on a daily closing basis initially opens the door for a challenge of the October 8 swing bottom at 0.6425. Immediate resistance is in the 0.6575-91 zone, with a reversal back above that putting the lower bound of the 0.6727-topped resistance bloc at 0.6653 back in the spotlight.
Zooming out to the monthly chart reveals NZDUSD sellers to be threatening much more than just the latest swing low. The pair appears to be sitting squarely atop 17-year rising trend support. A breakdown here would mark a tectonic shift in the underlying directional bias, setting the stage for lasting weakness to come.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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