NSDUSD has rebounded by almost 3% from the 2½-year low of 0.6543 touched on August 15. The downside pressure has eased for now, at least in the short term, with price action moving above the 20-day moving average (MA). However, additional gains look doubtful as the RSI appears to have peaked around the 50-neutral level, indicating lack of momentum in either direction in the near term.
To extend the rebound, prices would need to overcome nearby resistance at Tuesday’s near 3-week top of 0.6726. A climb beyond this level would help strengthen the upside momentum and drive the pair towards the 50-day MA, which currently stands at 0.6743. A successful challenge of the 50-day MA would open the way towards the bottom of the Ichimoku cloud, which would likely provide strong resistance around 0.6790.
A break inside the cloud would help shift the bearish medium-term picture to a neutral one.
However, if NZDUSD was unable to sustain its short-term uptrend and reversed lower again, immediate support should come from the 23.6% Fibonacci retracement level of the upleg from 0.6543 to 0.6726 at 0.6680, near today’s intra-day low. Not too far below, another potential barrier is the 38.2% Fibonacci level around 0.6655, which happens to lie between the 20-day MA and the Tenkan-sen line of the Ichimoku cloud. A drop below this support area could accelerate the declines, bringing prices back within range of the more than 2-year low of 0.6543, though the 61.8% Fibonacci at 0.6615 could attempt the halt the slide before that.
A breach of the August trough would reinforce the medium-term downtrend and the next major support to watch below that is the 161.8% Fibonacci extension at 0.6430.
