NZDUSD maintains a bearish bias as it resumed its downside following a break of a key level at 0.7200. The pair is now at its lowest level since June 6 at 0.7144. Both the short and medium-term picture has turned bearish.
Looking at the 4-hour chart, the downtrend that started from the July 27 high of 0.7557 remains in progress and is highlighted by the bearish crossover of the 20-period moving average with the 50-period MA on August 23. Momentum to the downside has gained traction as RSI is steeply sloping down. It should be noted that the indicator is approaching oversold levels at 30 which could result in a pause in the market’s descent for now.
Failure to rise back above the key support-turned-resistance level at 0.7200 anytime in the near term would increase downside pressure and strengthen the bearish case. From here, the focus would turn to another key area at 0.7057 which acted as support as well as resistance in the recent past. The key psychological 0.7000 level is another support which if broken would target the multi-month low at 0.6817 (touched on May 11).
A sustained move back into the 0.7200 handle would ease immediate downside pressure but only a rise back above the 0.7300 would help shift the focus back to the upside. Resistance at 0.7394 is important since it is the 61.8% Fibonacci retracement of the downtrend from the 0.7557 peak (July 27). Rising above it would target 0.7458 which is another key level that acted as both support and resistance recently. From here NZDUSD could see a re-test of the multi-year high at 0.7557 to change both the short-term and medium-term trend to bullish.
