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.
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.
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.
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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