The NZD/USD is reversing last week’s rally. Let’s take a look at the charts and assess the technical development.
In the 4H chart, we can see that price rallied last week from about 0.7425 to 0.7740. This week the kiwi-dollar formed a price top and broke below the 0.7633 support during the 4/23 session. The decline started in the 4/22 session and looks very sharp.
Now, NZD/USD is in a choppy market in the short to medium-term, so this bearish swing is not very helpful in terms of giving us a clue of the direction in the medium-term. In the very short-term we might say that the 0.7630-0.7660 should be monitored for resistance if there is a pullback. If price climbs back above 0.7660 and the RSI climbs back above 60, the choppy, bullish correction mode would likely still be in play.
If price falls below 0.75, and the 4H RSI falls to 30, NZD/USD might start to revive the prevailing bearish trend seen in the daily chart. This is because it would clear some key moving averages in the 4H and daily chart and break below a rising trendline from March’s low around 0.72.
The bearish outlook would first put pressure on the 0.7176-0.72 low on the year ,with risk of continuing lower because the prevailing downtrend would still be intact. One of the evidence of an intact bearish trend is that the daily RSI is still holding under 60, which reflects maintenance of the bearish momentum.
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