Chart Of The Day NZDUSD short term corrective upmove remains intact

Short-term technical outlook on NZD/USD

Key technical elements

• The recent 6% decline from its 16 Oct 2017 high of 0.7210 (the worst performer among the majors against the USD) has been triggered by political event where the a change of NZ government may put pressure on the NZ central bank, RBNZ to add a “growth objective” on top of its current inflation targeting when it sets out its monetary policy.
• The aforementioned slide has stabilised at the 0.68000 key  medium-term support coupled with a bullish divergence signal seen in the daily RSI oscillator with a recent bullish breakout seen its former corresponding resistance at the 40% level. These observations suggest that downside momentum of price action has started to abate (see daily chart).
• The pair is likely in the midst of undergoing a mean reversion corrective rebound to retrace the recent steep decline from 16 Oct 2017 high. The key medium-term resistance to watch will be at the 0.7056/7135 zone as defined by the pull-back of the former primary ascending channel support from 24 Aug 2015 low and the descending trendline from 27 Jul 2017 high (see daily chart).
• In the short-term, the pair has continued to evolve within a minor ascending channel in place since 17 Nov 2017 low with its upper boundary coming to act as a resistance at 0.6960/6980 that also confluences with a Fibonacci projection cluster (see 1 hour chart).
• The key short-term support rests at 0.6870 which is defined by minor congestion area of 04/05 Dec 2017.

Key levels (1 to 3 days)

Intermediate support: 0.6890

Pivot (key support): 0.6870

Resistances: 0.6945 & 0.6960/6980

Next support: 0.6800 (medium-term support)

Conclusion

The short-term (minor) uptrend of NZD/USD from 17 Nov 2017 low remains intact. As long as the 0.6870 key short-term pivotal support holds, the pair is likely to shape a further potential corrective rebound/ up move to retest the recent 28 Nov 2017 swing high area of 0.6945 before targeting the next intermediate resistance zone of 0.6960/6980.

However, failure to hold above 0.6870 shall jeopardise the bulls for a further slide to retest the 0.6800 key medium-term support.

Charts are from eSignal

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