NZD/USD technical analysis: Prepares for footing or tumble, gains questioned

NZDUSD has deflected off the 0.7306 high and is currently tackling the 0.7239 level, which happens to be the 23.6% Fibonacci retracement of the up leg from 0.6510 until 0.7464. The 200-day simple moving average (SMA) is defending the uptrend, while the entwined and horizontal 50- and 100-day SMAs are not endorsing any clear direction for now.

The Ichimoku lines are signalling that bullish sentiment has slightly eased, while the short-term oscillators are reflecting a pickup in negative pressures. The MACD is in the positive region and is holding above its red trigger line, while the RSI is faltering in the bullish territory. The stochastic oscillator has adopted a negative bearing and is promoting the pullback in the price.

Currently, sellers are fighting the 23.6% Fibo of 0.7239, however they would need to produce a more profound backing to dive the price past multiple obstacles including a minor uptrend line pulled from 0.6942, which are creating a reinforced support zone.  Successfully sinking beneath this key zone from the Ichimoku cloud’s upper band at 0.7205 until the 38.2% Fibo of 0.7098, sellers may then target the support base of 0.6942-0.7000, where the 200-day SMA also currently resides.

If the price finds traction off the cloud’s upper surface, initial resistance could arise from the 0.7306 nearby high. Overcoming this could propel the price towards the resistance section existing between three rally tops - achieved in September 2017, January and February 2018 - and the multi-year peak of 0.7464. Triumphing over the near 43-month peak of 0.7464, the bulls could then aim for the neighbouring resistance band of 0.7525-0.7577.

Summarizing, NZDUSD’s bullish tone may strengthen with a thrust above 0.7306, while a retreat below the cluster of support barriers could put strain on near-term improvements.