NZD/USD Candlesticks and Ichimoku Analysis

Kiwi dropped sharply as broke below the Kijun-Sen as suggested in our previous update, adding credence to our bearish view and the breach of 0.7001 support confirms temporary top has been formed earlier at 0.7635 and bring retracement of recent upmove to indicated downside target at 0.6814 (38.2% Fibonacci retracement of 0.5487 to 0.7635) and later towards support at 0.6685 but reckon 0.6594 (previous resistance turned support) would hold from here.

On the upside, although recovery back to 0.7001 (previous support turned resistance) cannot be ruled out, the Tenkan-Sen and Kijun-Sen (now at 0.7143 and 0.7118 respectively) should limit upside and bring another decline to aforesaid downside target later. Only a weekly close above these two lines would suggest the correction from 0.7635 has possibly ended and bring stronger rebound to 0.7300 but resistance at 0.7445 should continue to hold.

On the daily chart, although kiwi recovered to 0.7153 earlier this week, renewed selling interest quickly emerged below the Kijun-Sen and price dropped sharply from there on risk aversion and the breach of 0.7001 support reinforced our bearishness (indicated downside target at 0.6916 - 50% Fibonacci retracement of 0.6196 to 0.7635 has been met) and further fall towards 0.6746 (61.8% Fibonacci retracement) would be seen and possibly towards support at 0.6685 but reckon support at 0.6644 would hold on first testing.

On the upside, expect recovery to be limited to 0.7001-07 (previous support turned resistance and current level of the Tenkan-Sen) and bring such a decline to aforesaid downside targets. A daily close above this resistance would defer our bearish view and risk stronger rebound to 0.7100, however, 0.7124-43 (current level of the Ichimoku cloud bottom and the Kijun-Sen) should attract renewed selling interest and bring another decline