NZD/USD: Off 19-day highs, 1H chart shows bearish RSI divergence

NZD/USD has backed off from 19-day highs amid losses in the S&P 500 futures.
The bearish divergence of the RSI seen in NZD/USD's hourly chart indicates scope for a deeper pullback.

Omkar Godbole FXStreet Contributor

The NZD/USD pair is currently trading largely unchanged on the day at 0.6883, having clocked a 19-day high of 0.6902 yesterday.

Buoyed by strong retail sales for the final quarter of 2018 and the US-China trade optimism, the Kiwi dollar jumped to the highest level since Feb. 6 yesterday.

The currency pair also closed above the resistance of the trendline sloping downwards from Feb. 1 and Feb. 18 highs.

So far, however, the follow-through to that bull breakout has been hardly bullish, possibly due to signs of risk-off in the US equity futures. At press time, the S&P 500 futures are down 0.16 percent.

Further, NZD/USD's hourly chart is showing a bearish divergence of the relative strength index (lower highs on RSI as opposed to higher high on price). The pair, therefore, could fall back to 0.6860-0.6850 in the next few hours.

RBNZ's Bascand was out on the wires earlier today stating that the central bank's plan to raise capital requirements for the banks will likely have a limited impact on the economy. The NZD barely moved in response to Bascand's comments.

Technical Levels

1. R3 0.6969
2. R2 0.6936
3. R1 0.6909
PP 0.6877
1. S1 0.685
2. S2 0.6817
3. S3 0.6791

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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