Kiwi has made a more convincing break below 0.60. The more substantive move should quell any debate about whether the 0.60 level has been sustainably breached or not, and technically, it brings 0.5940 (the 76.4% Fibo of the 2020/21 rally) and 0.5915 (the May 2020 low after the April 2020 bounce) into focus.

FX sentiment remains USD/globally driven, and the NZD struggled to garner any support from GDP data yesterday. Surprising as that was, given the size of the miss, what that tells you is that the market will be sensitive to next week’s Fed ‘75 or 100 bps’ rate hike decision.

Kiwi bulls step in and eye the 0.6000s, the price has indeed come up to the 0.6000s, but the bears put up a strong defense on the way there as the following will show. Meanwhile, the prospects from here are two-fold as the countdown to the Federal Reserve gets underway.

The price was showing signs of a bullish correction for the session ahead with 0.6000 on the radar. The price reached towards the 0.6000s but failed sooner and dropped heavily as illustrated and projected so.

Since then, however. the bulls have remerged leaving two possible scenarios for the forthcoming days: 

If the price continues to correct higher, it will leave a more well-defined W-formation behind that may either result in a move lower or higher on a retest of the neckline, as illustrated above ad below respectively.

A fair reversal to the EMA-200 and EMA-100 can be kept in regards before the NZDUSD pair takes a sharp turn to the downside again. The relative strength index needs to be corrected on intermediate and interday time frames in shape of a bullish temporary correction before the pair decides its next landing. 

Prominent Oversold Conditions on Kiwi

Sep 19 2022