The New Zealand dollar bears are taking a breather on Monday after sharp fall last week when the pair was down nearly 3% on strong sell-off, triggered by political uncertainty.
Last week’s fall marks the biggest weekly losses since early Nov 2016.
Fresh five-month low at 0.6930 was hit in Asia on Monday, with subsequent bounce remaining capped under broken psychological 0.7000 level.
However, stronger correction cannot be ruled out as slow stochastic is in deep oversold territory but no firmer reversal signal being generated yet.
Stronger recovery through 0.7000 should stay below falling daily Tenkan-sen (0.7070) before bears resume, as overall structure is negative.
The pair is riding on the wave C of five-wave sequence from 0.7558, which eyes its FE 123.6% at 0.6907.
Res: 0.7000, 0.7055, 0.7070, 0.7126
Sup: 0.6930, 0.6907, 0.6844, 0.6817