NZDUSD maintains a weak technical undertone and has been in a clear downtrend since retreating from the July 27 top of 0.7557. The market has been making lower highs and lower lows and is currently trading below the key 0.7200 level.
On the 4-hour chart, the immediate risk is to the downside as prices have fallen below the 20- and 50-period moving averages. The bearish view was strengthened after the crossover of the shorter-term SMA below the 50 SMA on August 23. Downside momentum is gaining traction since the RSI has broken below 50 and is entering bearish territory.
The immediate target to the downside is the August 31 low at 0.7131. 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 (between March to June). 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).
The bearish bias remains favorable unless there is a move above support-turned resistance at 0.7200 that would decrease downside pressure. A rise above the September 5 high of 0.7262 and cloud top would open the way to key resistances level at 0.7300 and 0.7340. A continued push higher would see a shift in the current bearish trend.
For now, there are no signals for a change in the downtrend. Ichimoku cloud chart analysis reaffirms the bearish picture as NZDUSD is below the cloud.
