NZD/USD Technical Analysis: Key Kiwi Dollar Support at Risk

NZD/USD Technical ANALYSIS: BEARISH

• New Zealand Dollar inching toward a test of 3-monh trend support
• Confirmed breakdown may mark start of bearish trend resumption
• Long-term chart setup seems tilted to favor a broadly bearish bias

The New Zealand Dollar is grinding lower as expected after producing a Shooting Star candlestick at bearish trend resistance set from July 2017. A break below support defining December’s month-long rise has now been followed by a breach of former resistance at 0.6636, seemingly setting the stage for a challenge of the upward-sloping barrier defining the recovery from late-September lows.

How prices behave at this barrier might prove trend-defining. If buyers manage to defend it, another foray higher to test the bounds of the long-term downtrend may follow. A break below it – with confirmation on a daily closing basis – would suggest that a corrective rise has been exhausted and set the stage for bearish resumption. A dense support block in the 0.6425-96 region follows immediately thereafter.

Daily NZD/USD chart created using TradingView

A look at longer-term positioning on the monthly chart seemingly suggests the path of least resistance favors the downside. Recent NZD/USD gains appear as a retracement after the pair broke the bounds a nearly two-decade-long advance and landed atop the long-standing 0.5914-0.6197 congestion zone. With key resistance having now held up to retest in December, the time to re-engage the trend may reasonably be at hand.

Monthly NZD/USD chart created using TradingView

NZD/USD TRADER SENTIMENT

NZD/USD TRADING RESOURCES:

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

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