The NZD/USD pair fell to its lowest level this year on Monday on the back of a sharp decline in the Nikkei 225 (-12.4%). However, this new low was only a few pips above the April 2024 low, and the price rose sharply.
The momentum stalled near last week’s highs at around 0.5982 and after the price turned lower on Tuesday and found support near its 200-hour moving average, the price resumed its upward march extending towards its next 200-bar moving average on the 4-hour chart, and its 100-day moving average. It was also the 61.8% retracement of the move down from the July high near its 100-day moving average at 0.6037.
In today’s trading, the price rose to a new high for the week at 0.6034, just short of the higher technical targets. Buyers turned into sellers as they took up the key risk identification level.
What’s next?
The bearish cycle has approached the 50% midpoint and natural support at 0.6000. This is the next target that needs to be broken to give sellers more confidence. In the absence of that and going forward, the boundaries are defined with the 100-day/61.8% moving average at 0.6037 as resistance, and the 50% midpoint at 0.60000 as support.
Traders can count on or look for a break of either extreme.