Kiwi Dollar managed to break the 0.782 soft resistance early yesterday, even using it as a support during early US session before renewed non-tapering bets weakened USD and pushed NZD/USD above the 0.785 stronger resistance. However price wasn’t able to stay above 0.785 for long, pushing back towards the 0.782 support during early Asian session, brought about by risk aversion flows which was as seen from Nikkei 225 and Hang Seng Index which gaped lower on open. This level has mostly held in the past few hours but it is threatening to break currently.
From a technical perspective, a break of 0.782 opens up the descending Channel Top as the next level of support. However, given that stoch readings are close to oversold now, it is hard to imagine price continuing to push lower without some sort of bullish pullback in between. It is possible that recent swing low of 0.777 may be one such level where price may rebound higher. Should this really happen, see if the 0.78 round figure resistance will hold. If yes, we could see further acceleration towards Channel Top even if Stoch readings continue to remain extremely oversold. By trading below 0.78 we would have also negate this week’s mild bullish pressure, and may pave the way for further bearish endeavors for the rest of the week.
This notion is clear via the Weekly Chart. Prices is now hovering above the Multi-Year Channel Bottom, which happens to be confluence with the 0.78 round number support. Last week we’ve mentioned how bears were entering bullish territory with the attempted break of Channel Bottom. Unfortunately bears did not manage to succeed, and we did see a pullback on Friday that continued into Monday. However, instead of moving towards Channel Top, bears seem to be gaining the upperhand currently, and we could see yet another attempt to break the Channel Bottom line soon.
Fundamentally, we do not have any major news regarding New Zealand lining up this week other than NBNZ Business Confidence on Thursday and Building Permits numbers on Friday. Even though it is unlikely that any of these numbers would send NZD/USD heavily in either direction, we could still use them to gauge forward sentiment especially if prices are still dithering around Channel Bottom. Other than NZ related news, keep a lookout on US news as market is currently highly sensitive to US economic numbers as traders are none the wiser whether a Sept QE Taper action will happen or not. With USD being highly jittery, NZD/USD traders should also be careful and seek further confirmation on rebounds/breakouts in order to prevent themselves from entering on whipsaws.
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