NZD/USD Testing the Resolve of its Double Bottom

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NZD/USD Testing the Resolve of its Double Bottom

In the daily chart we can see the NZD/USD in a double bottom attempt after failing to clear the low around  0.7176 twice. Last week, price was able to start with a break above the 0.7613 support/resistance pivot, which completed the double bottom pattern. However, it has since held below the 0.77 handle and mostly below the 100-day SMA. The RSI has also held below 60, which shows maintenance of the prevailing bearish momentum.

NZD/USD Daily Chart 3/30
nzdusd daily chart 3/30
(click to enlarge)

Basically, the double bottom is not accompanied by other bullish signs and is thus now being tested for its resolve.

In the daily chart, we can see that there is a central support/resistance pivot around 0.74. If price breaks below 0.74 it would also break below the rising speedline coming up from the March low. It would also put NZD/USD under the 50-day SMA and completely revise the bearish bias based on the moving average – price picture.

Looking at the 4H chart, we have a closer look at the 0.74-0.7450 support area. This area includes a previous resistance area, the lower end of the the moving average cluster, and as noted ,the rising speedline coming up from the March low. If price holds above this area we are likely to see further bullish correction, especially if the 4H RSI can hold above 40 for the most part, forgiving some violation within the intra-session time-frame.

NZD/USD 4H Chart 3/30
nzdusd 4h chart 3/30
(click to enlarge)

It should be noted that this is NFP-week. The USD has been on its backfoot but looks to be gathering some momentum at the start of the week. The forecast for the jobs data is not impressive, so let’s not expect a bearish continuation right away even with a break below 0.74. We should expect a choppy one, but if the market is to continue the downtrend, NZD/USD should start holding below 0.7550, and should be able to break below 0.74 by the end of the 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.