The NZD/USD has been bearish since marking a high on the year at 0.8840 in July. The daily chart shows that this downtrend started to stall in October, when it hovered above 0.77. In November, NZD/USD marked a new low on the year at 0.7660, but price action also consolidated. As we get into the second week of December, price is starting the week breaking into a fresh low on the signaling bearish continuation.
The technical conditions in the daily chart all point to the downside and price is poised to at least test the 0.76 handle. Now, there are two components, direction and choppiness. NZD/USD is bearish, but has recently been choppy. If there is still some choppiness and NZD/USD pops rebounds, it would still be bearish if price can hold below 0.78, forgiving some intra-session break. If price returns above 0.78, we can expect more consolidation.
Otherwise, if price can hold below 0.78, there is downside risk toward the 2012-lows in the 0.7450-0.75 area. Note that it has just cleared the the 2013 lows around 0.7687.
Negative Reversal: Another bearish sign in the weekly chart is the negative reversal signal – a higher high in the RSI while price made a lower high, suggesting at least another bearish attempt.
Expecting Support at 2012-Low: As price respected the 0.7687 2013-high for a couple of months, it should find some support around the 2012-low of 0.7453 as well, especially with the weekly RSI dipping back into oversold territory.
Another reason to expect support: It should also be noted that price action in the past few years since the 0.4875, 2009-low, has been choppy but slightly bullish. The current dip thus is only a trend in the medium-term against a long-term uptrend. Another reason we should mind the combination of key support and weekly momentum at oversold area.
Again, the upside from this low should be limited to the 0.77-0.78 area.
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