This week we present one technical view: NZD/USD – Bear trend set to continue.
Strategy Summary – Bear trend to continue. First target .6872, followed by .6560. Resistance at .7578.
The technical outlook for NZD/USD remains negative, with further weakness anticipated in due course. The sharp reversal from the major .8845/.8836 (1 August 2011 - 10 July 2014) double top reached .7177 on 3 February this year before the market bounced on the back of a 14-week bullish RSI divergence signal. The subsequent rally lacked momentum, however, and bulls could only post a high of .7745 (29 April) before losing traction.
The prior downtrend should now resume and a break below .7177 will open up falls to .7116/ .6948 (17 March 2011/25 August 2010 lows). Through here we will target the 50% retracement of the March 2009 – August 2011 advance at .6872 and possibly even the 2010 low (25 May) at .6560.
Attempts to rally should now fade under resistance at .7565/78 (14 May highs). A break above here can trigger a more substantial correction but sellers should look to re-group ahead of the 15 January year-to-date high at .7891 and the 50-week MA.
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