NZD/USD has been trading down in a choppy manner since November’s high at 0.7975. The 4H chart shows the pair’s whippy price action that has made a low in December at 0.7608. This week, the market bought NZD/USD from 0.7608 up to about 0.7870, where price encountered a falling speedline that has held down price action since mid-November.
So far in this last 2 session of the week, the market is respecting the falling trendline, fading NZD/USD back below 0.78. The 0.7730-0.7760 area contains some key support factors for the short-term, including this week’s rising speedline and some support/resistance pivots as well as the 50-hour SMA.
A break below 0.7730 should reflect a bearish continuation in the short-term with the 0.76-0.7610 area in sight.
Now, to the upside, we should consult with the daily chart. A break above 0.7870 should reflect a shift away from the bearish mode since mid-November. But when we look at the daily chart we can see that it would still be within the context of a slightly bearish channel. Although there are lower lows and lower highs, this channel formed since early October represents consolidation.
With the prevailing downtrend intact, if price breaks above 0.7870, we will still have to monitor for resistance up to the 0.8035 area. A break above 0.8050 should make the market reassess price action since October to be a price bottom.
In that scenario, there could be upside risk to the 0.83-0.84 area.
Next Week – FOMC and Q3 NZ GDP q/q:
Next week, the key fundamental factors will the FOMC decision on Wednesday and the NZ GDP q/q for Q3 on Thursday. If after these key risk factors, NZD/USD still remains below 0.80 and the daily RSI still remains below 60, the NZD/USD should still be in a bearish mode, with the 0.76-0.7610 area in sight.
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