NZD/USD Price Analysis: Surrenders 0.5600, brace for an inverted flag break
- The greenback bulls are on the verge of delivering a break of the Inverted Flag.
- A defend of a bull cross by the 20-and 50-EMAs has added to the downside filters.
- The RSI (14) has shifted into the bearish range of 20.00-40.00, signals more weakness ahead.
The NZD/USD pair has stepped below the critical support of 0.5600 in the early Asian session as soaring risk-off bets have forced the market participants to ditch the risk-perceived assets. The asset has delivered a downside break of the minor consolidation in a 0.5597-0.5611 range and is expected to remain in the tenterhooks ahead.
The comments from North Korean leader Kim Jong-un, reported by KCNA news agency, that he doesn’t need to have a dialogue with the enemy and will continue to strengthen its nuclear operations ahead have escalated geopolitical tensions.
On an hourly scale, the asset is on the verge of a break of the inverted flag chart pattern. The continuation pattern delivers a downside wave after a breakdown of the mark-up inventory distribution phase.
It is worth noting that the 20-and 50-period Exponential Moving Averages (EMAs) have defended the occurrence of a bullish cross at around 0.5729, which indicates the strength of the greenback bulls.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which signals that the downside momentum has been activated.
The kiwi bulls could display more weakness if the asset drops below September’s low at 0.5565. An occurrence of the same will drag the asset toward the psychological support and March 2020 low at 0.5500 and 0.5469 respectively.
On the flip side, a decisive break above September 29 high at 0.5752 will send the asset toward the round-level resistance at 0.5800, followed by September 22 high at 0.5888.
NZD/USD hourly chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
