NZD/USD Technical ANALYSIS: BEARISH
- New Zealand Dollar pressuring four-month rising trend support
- Break lower might see long-term structural decline re-engaged
- Neutralizing selling pressure probably needs close above 0.67
The New Zealand Dollar edged down to test support guiding a three-month recovery against its US counterpart after a telltale Shooting Star candlestick appeared on a test of trend resistance from July 2017 (as expected). The selloff paused here thanks to fillip from better-than-expected CPI data, but the pair tellingly held below immediate resistance at the 0.6636 and kept the near-term series of lower highs intact.
Daily NZD/USD chart created using TradingView
If this proves telling of sellers’ conviction, a break through the upward-sloping floor establishing the rise from October’s swing bottom might be on the horizon. Such a move would paint recent gains as corrective and set the stage for resumption of the longer-term decline. A dense layer of back-to-back support sits in the 0.6425-96 area. Below that is the 0.6322-34 zone, followed by a five-year bottom near 0.62.
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Neutralizing near-term selling pressure might begin with a daily close back above 0.6636. Making the case for upward follow-through probably requires a daily close above 2.5-year trend resistance however, which now sits just a hair above the 0.67 figure. Establishing a foothold above that might pave the way to revisit the December 31 high at 0.6756, followed shortly thereafter by the July 19 top at 0.6791.
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— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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