Earlier this week, we highlighted the bearish channel in NZDUSD following New Zealand's 2Q CPI data. Since then the pair has drifted towards the upper range of the bearish channel and was rejected from channel resistance and confluence of Fibonacci levels. This can be seen in the chart below with yesterday's failure above the 0.7910/20 zone which is where the 23.6% Fibonacci retracement of the drop from 2013 highs to lows converges with the 50% Fibonacci retracement of the more recent decline from June highs to lows. NZDUSD is lower today and a continuation of the bearish trend looks likely while the 0.7920 area holds as resistance (a sustained break above resistance negates the bearish technical outlook). Some key levels to watch moving forward are:
Support
0.7855/60 - 38.2% Fibonacci retracement (of June range)
0.7790/00 - 21-day simple moving average & 23.6% Fib retracement (June range)
0.7680/85 - 2013 lows
Resistance
0.7910/20 - 23.6% Fib retracement (of 2013 range), 50% retracement (June range), & channel resistance
0.7965/70 - July high, 61.8% Fib retracement (June range)
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