NZD/USD Technical Analysis: New Zealand Dollar May Be Peaking
NZD/USD Technical ANALYSIS: BEARISH
- New Zealand Dollar hits 5-month high but signs of topping remain
- Negative RSI divergence hints secondary top forming at resistance
- Close under 0.6425 would suggest long-term downtrend resuming
So far, New Zealand Dollar sellers have been unable to build on early signs of bearish reversal – a seemingly telltale Shooting Star candlestick on a test of dominant trend resistance set from July 2017. Yet a reversal lower may still be in the cards, albeit after the begrudging formation of a secondary top.
A half-hearted attempt at a selloff soon gave way to directionless drift, followed by a formidable foray to the upside. While this move set a higher high, it fell conspicuously short of closing above the Shooting Star peak. Ominously negative RSI divergence now warns of ebbing upward momentum.
This is a pattern that occurs often enough to notice. A topping sequence begins with an initial attempt at peaking, which is then followed by a nominally higher high that fails to confirm a breakout and translates into an adverse RSI signal. This scenario is of course unconfirmed itself for now, but it is plausible.
Major support is clustered in the 0.6425-96 zone, where prior areas of congestion and trend support set from October’s bottom meet. Breaking below that would be a very compelling indication that the long-term downtrend has resumed. Neutralizing it in earnest probably requires a break above 0.68.
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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.