Wed, Jun 29, 2022 @ 15:52 GMT
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NZDUSD Turning Neutral, September’s Bullish Run At Risk Of Deeper Pullback

NZDUSD failed to hold gains made after a rally from 0.7131 to 0.7434 that took place during August 31 until September 20. The market became overbought and reversed back down. This was indicated on the 4-hour chart where the RSI oscillator reached extreme conditions above 70. The near-term risk is clearly to the downside as RSI has a steep downward slope.

The recent move lower could be seen as a corrective move of the recent uptrend. A bounce back above resistance at 0.7340 would shift the focus to the upside for a re-test of the 0.7434 high. Clearing this level would open the way for a rise to 0.7458 and 0.7524.

But with significant loss of upside momentum, the short-term chart suggests a potential top could be developing now at 0.7434 and the market would be entering a consolidation phase. The drop below what was acting as an important support area at 0.7340 increases the risk to the downside.

A continued downward trajectory below the 50-SMA at 0.7280 would target support at 0.7247 (September 18 low). Next support at 0.7182 (September 14) would come into view. Below this, the outlook would turn more bearish for a target of 0.7131.

Overall NZDUSD retains a bullish undertone since early September but the uptrend from 0.7131 will be threatened if there is a drop below 0.7247.

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