Technical setup on 4H continues to signal downside risks
- The NZD / USD shows a bearish indicator on the four hour chart.
- The strength of the mood-at-risk DXY keeps sellers optimistic.
- The RSI points south below the midline, allowing for more declines.
NZD / USD winds near daily lows just above 0.6900, almost unchanged that day as bears wait for a strong catalyst for the next drop.
The return to risk-free trading in Asia, amid growing concerns over cases of stress from Delta Covid and worries of an economic slowdown again, is increasing demand for safe haven for the US dollar at the expense of the price-sensitive kiwifruit. risk.
The kiwi was the weakest among the G10 currencies on Tuesday, despite a brief reversal in the markets. At time of printing, the spot is trading at 0.6913, after hitting daily lows at 0.6907.
From a technical standpoint, the recent sell-off that followed a brief stint of consolidation so far on Wednesday has taken the form of a bearish flag.
The bears are now waiting for further momentum to produce a bearish breakout of the bearish flag, beating the bullish commitments at 0.6905.
Sellers would then target the multi-month lows of 0.6881, below which the psychological level of 0.6850 could come into play.
A sustained break above the uptrend line resistance at 0.6933 will invalidate the bearish formation, triggering a significant rally towards the 21-Simple Moving Average (SMA) sloping downward at 0.6960.
However, the Relative Strength Index (RSI) pointing south, just above the oversold region, suggests that a potential drop may be on the horizon.