NZD/USD Technical Analysis: Will the Kiwi Dollar Keep Falling?

NZD/USD Technical ANALYSIS: BEARISH

• NZ Dollar breaks monthly trend support after rejection at key resistance
• Short-term chart positioning warns sellers may struggle to follow through
• Overall trend bias still bearish absent recovery north of the 0.70 figure

The New Zealand Dollar extended lower as expected after putting in a Shooting Star candlestick at 2.5-year trend resistance and pushing through support guiding December’s month-long rally. Sellers are now flirting with minor resistance-turned-support at 0.6636. A daily close below that opens the door for a descent to challenge the dense 0.6425-96 support zone.

Daily NZD/USD chart created using TradingView

A look at the four-hour chart suggests immediate selling pressure may struggle for follow-through however. Positive RSI divergence has emerged on a test of upward-sloping support set from early December, pointing to ebbing bearish momentum. What follows next may be mere consolidation before liquidation resumes, but a bounce might also materialize.

4-hour NZD/USD chart created using TradingView

Initial resistance is at 0.6680, marked by January’s range top and reinforced by a falling trend line defining the descent from the December 31 high. A close above that would suggest near-term selling pressure has been neutralized. Upending the case for a long-term, structural decline will take more effort however. The monthly chart suggests that would require reclaiming a foothold near the 0.70 figure, above the 2018 high.

Monthly NZD/USD chart created using TradingView

NZD/USD TRADING RESOURCES:

• Just getting started? See our beginners’ guide for FX traders
• Having trouble with your strategy? Here’s the #1 mistake that traders make
• Join a free live webinar and have your trading questions answered

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter