NZD/USD is close to strong resistance, and may retrace slightly in the future; how long is the downside of the exchange rate likely to last? What technical levels are there to watch?
NZD/USD short-term technical outlook: Neutral
After six weeks of speculative gains, NZD/USD appears poised to give back some of its gains.
NZD/USD is up 14% since mid-October and is now testing strong resistance near its 200-day moving average. The author has emphasized the role of this resistance in previous articles. In addition to the long-term moving average, downtrend resistance from June and a slightly uptrend trendline from July are also located near this resistance level.
NZD/USD daily chart
Chart source: TradingView
Bearish divergences in oscillators (i.e. higher prices coincided with lower or stalled momentum indicators) on the daily and lower time frames also suggest that the rally is showing signs of fatigue, although no sign of an uptrend reversal is yet in sight .
If history is any guide, a pullback wouldn’t be surprising. The rally in late 2021 and early 2022 has lost momentum around the long-term moving average. The NZD/USD pullback was preceded by a bearish divergence similar to the current divergence on the oscillators.
NZD/USD 4-hour chart
Chart source: TradingView
Any possible retracement would open the door for a move towards last week’s high around 0.6205. A break below this level would confirm that upward pressure has eased, paving the way for a return to the November 17 low of 0.6060. This support is quite strong and may be difficult to break, at least on the first try. Indeed, this bottom support could open the door for a retest of Thursday’s high of 0.6290. (Translated by Ashley by Manish Jaradi)
NZD/USD weekly chart
Chart source: TradingView
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