Technical Sentiment: Bearish
Key Takeaways
The U.S. Dollar remains extremely bullish across the board, however NZD/USD has been reacting at a much slower pace, indicating a correction might commence soon off 0.8100 – where we can observe a really large support cluster.
Technical Analysis
While EUR/USD, GBP/USD and USD/CHF show a clear tendency to book further gains in favor of the USD; NZD/USD is finally showing some signs of exhaustion after touching a low point of 0.8076 on two consecutive days. The pair seems ready to close the week on a neutral/slightly positive tone, breaking a long losing spreading over five consecutive weeks.
Location wise, 0.8100 represents a monstrous support cluster on the weekly timeframe. A yearly trendline intersects a similarly old price pivot zone, and they are all strengthened by the 200-Week Simple Moving Average (red line). Additionally, NZD/USD declining from 0.8834 down to 0.81 completes a 61.8% Fibonacci retracement between 0.7682 and 0.8834. With stochastic located in extreme oversold territory, we simply cannot rule out the increasing probability of a temporary bottom forming in this area. A bullish correction will come into play if price develops a Higher High above 0.8229, a move that could pave the way towards 0.8320 and lastly up to 0.8400, where the main downtrend should kick in again.
Free Reports:
Failure to remain above 0.8100 spells trouble for NZD/USD, opening potential support levels as low as 0.7700-0.7800 before this overextended downswing will require a correction.
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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets
