NZDUSD has been refusing to close below the Ichimoku cloud since the slump to an almost two-month low of 0.7097, also finding assistance from the surface of the broken symmetrical triangle, which has recently adopted a supportive role.
Upside corrections, however, were limited too as the shorter-term simple moving averages (SMAs) have been capping bullish actions with the help of the triangle’s lower boundary, keeping the pair in a neutral mode.
The sideways move in the RSI and the MACD is reflecting the indecisive mood in the market, but given that both indicators continue to fluctuate below their neutral levels, downside risks seem to still be in play.
A break below the cloud and the lower restrictive line at 0.7157 could see the test of the 0.7100 handle from early in March. Falling deeper, the 50% Fibonacci of 0.6587 – 0.7463, which coincides with the December barrier around 0.7025, could save the pair from a sharper downfall and a significant outlook deterioration, which may stretch towards the 61.8% Fibonacci of 0.6866 and the 200-day SMA.
Alternatively, the bulls may need to push harder to clear the 20- and 50-day SMAs and the upper resistance line at 0.7213 and 0.7240 respectively to take full control. If those efforts prove successful, the price may pick up steam towards the 0.7300 level, while higher, the 0.7368 barrier will be closely watched ahead of the 0.7433 -0.7463 resistance area.
In brief, NZDUSD is currently facing a neutral-to-bearish bias, where a drop below 0.7157 would give the lead to sellers, while a close above 0.7240 could generate additional gains.
