NZD/USD Technicals Suggest New Lows on the Year

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NZD/USD Technicals Suggest New Lows on the Year

The NZD/USD pair has been bearish since making the 2014-high at 0.8835 in July. The weekly chart below shows the sharp decline which became choppy in October through the middle of January. Then we saw another dip at the end of January until the current 2015-low at 0.7176. In February, we can see that price rallied after a bullish divergence.

NZD/USD Weekly Chart
nzdusdweekly
(click to enlarge)

The rally in February met resistance at the previous support area just above 0.76. Then at the start of March, a very strong, almost engulfing bearish candle signaled bearish continuation. As price approaches the 2015, we saw a bounce. There is no question that the weekly chart is bearish, and if the short-term momentum is also bearish, we should see further decline in the upcoming weeks.

NZD/USD Daily Chart 3/15
nzdusddaily03152015
(click to enlarge)

Take a look at the daily chart. The moving averages are sloping down and are in bearish alignment. Furthermore, the respect of 0.76 was also respect for the 50-day SMA. Holding below the 200-, 100-, and 50-day SMAs confirm the bearish mode. The RSI came up from under 30 in February, but held below 60. This is also a sign that the bearish momentum remains in play.

NZD/USD 4H Chart 3/15
nzdusd4h03152015
(click to enlarge)

Now take a look at the 4H chart. Last week, after almost reaching the 0.7176 low on the year, there were some buyers. This rebound coincided with the the RBNZ’s decision to hold its official cash rate (OCR) at 3.50%. Because the market had priced in a dovish tone, the RBNZ’s neutral-tone statement gave the NZD a boost. The market is essentially pricing out some of the rate cut expectations.

However, this rally stalled at a previous support area just under 0.7450. Price essentially held under the 200-, 100-, and 50-period SMAs. The RSI also tagged 60 and fell, reflecting maintenance of the bearish momentum.

With the 4H chart also confirming the bearish outlook, there is a good chance that NZD/USD is heading into new lows on the year in the upcoming week.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.