NZDUSD stopped last week’s rally as the descending trendline and the 50% Fibonacci retracement of the decline stretched from the 0.6754 top proved hard to break once again, with the pair drifting south on Wednesday.
The falling RSI and the downside reversal in the Stochastics which have peaked in the overbought territory are discouraging signals and hence the focus may remain largely to the downside in the near-term unless the supportive area around the 38.2% Fibonacci of 0.5960 comes again to the rescue, pushing the price back towards the trendline. Otherwise, the pair may keep sliding, with the 0.5850 barrier and the 23.6% Fibonacci of 0.5770 being the next targets before all eyes turn to the 0.5600-0.5665 restrictive zone.
In the event the bulls return to the game, lifting the price above the descending trendline and particularly above the 0.6150 resistance, the door would open for the 61.8% Fibonacci of 0.6260. Slightly higher, the area between the 0.6325 number and the 200-day simple moving average (SMA) at 0.6380 will be closely watched by medium-term traders as any decisive close above that wall would upgrade the bearish outlook to a neutral one.
Summarizing, NZDUSD bears may dominate below 0.5960, while a clear break above the descending trendline could be the key for a more aggressive rally. In the medium-term, the negative trend may come to an end above 0.6380.
