NZD/USD’s positive mid-week momentum has faded on Friday, with the pair falling back below the key 0.6850 support zone into the 0.6820s, where it trades lower on the day by about 0.5%. Though the Dollar Index has not been able to recover back to the north of the 95.00 level on Friday, it has managed to muster a modest recovery from the two-month lows it printed earlier in the session. This improvement in US dollar demand, combined with choppy, mixed conditions in global equities, has weighed on the kiwi and is a principal driver of Friday’s downside in NZD/USD. Having broken above the previous top of 0.6855 indicates completion of the failure swing pattern that is supposed to encourage more buyers to rein the market.

Although, they need to overcome the firm resistance of 0.6886 before progressing higher. Following the breach of this hurdle, an accelerating upside bias can move the price towards the 0.6928-level.

BULLISH AND BEARISH ENTRIES AND TARGET DESTINATIONS :

If buyers become able to generate enough positive momentum, we can then look for a surge into the 200-day exponential moving average that is clustered between the 0.6955 and 0.6982 handles.

A sustained move over the 200-day EMA will indicate that bullish momentum is ramping up, with buyers targeting 0.7042 before reaching the upper band of the channel.

The RSI and the momentum oscillators imply that bullish sentiment is in the ascendant at the moment. The RSI just climbed out of the neutral zone above 55, and the momentum is pointing upward after crossing over the 100-threshold. At the same time, the MACD reflects that selling pressure is fading with the MACD bar shrinking in the negative territory above the signal line. 

In the bearish scenario, if sellers regain control, the price will find initial support at the 0.6827-barrier that lies on the 61.8% Fibonacci extension level.

A successful breakthrough of this hurdle can send the pair to the swing bottom of 0.6732, which is expected to serve as support.

NZDUSD Takes a Support of 61.8% Fibo

Jan 15 2022