NZD/USD Technical Analysis: Kiwi Dollar Rebound in the Works?
NZD/USD Technical ANALYSIS: BEARISH
- New Zealand Dollar down to four-month low as selloff resumes
- Positive RSI divergence hints a bounce might be brewing ahead
- Retail trader sentiment studies offering mixed directional cues
The New Zealand Dollar plunged against its US counterpart after an attempt at recovery fizzled fruitlessly, as expected. The currency pair has now plunged to the bottom of the downward-sloping channel guiding its descent since the beginning of the year, hitting a four-month low along the way.
Positive RSI divergence now speaks to ebbing downside momentum. That might speak to a period of consolidation or set the stage for a bounce. A break above support-turned-resistance at 0.6379 exposes the 0.6425-96 area, a barrier reinforced by the falling channel top.
A daily close above the outer layer of this region might neutralize selling pressure, at least in the near term. From there, prices are likely to be positioned for another challenge of the long-term decline in play since July 2017. Alternatively, extending lower form here eyes the five-year 0.6197-0.6245 support range.
NZD/USD TRADER SENTIMENT
Retail sentiment data shows 70.33% of traders are net-long, the long-to-short ratio at 2.37 to 1. The number of traders net-long is 8.89% higher than yesterday and 13.95% higher from last week, while the number of traders net-short is 22.37% higher than yesterday and 17.70% lower from last week.
IG Client Sentiment(IGCS) is typically used as a contrarian indicator, soretail traders being net-long suggests NZD/USD may continue to fall. However, positioningis more net-long than yesterday but less socompared with last week.This makes for an inconclusive sentiment-based directional bias.
NZD/USD TRADING RESOURCES:
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.