NZDUSD Consolidation is imminent

NZDUSD Consolidation is imminent

By: James Ansher | Where To Trade | On:30-09-2014 15:15
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Key Highlights

  • Major NZDUSD Support and resistance levels
  • Assessing the oversold conditions
  • Multi-timeframe RSI and 21 period moving average analysis
  • Oversold NZDUSD conditions persist

 

The NZDUSD has fallen for three straight months since July. Apart from the second week of September where the pair found significant resistance near the 0.8400 major level, every week closed below its opening levels. Today at the 0.7750 Levels, we are ready to retest the 0.7700 major levels again. The question is can we possibly fall any further and if so, by how much?

Support and Resistance level

  • 0.7700 is the nearest support for the pair we were last at this level on 7th July of 2013. Yesterday the pair found significant resistance 6 pips near the level and was unable to go down any further and break through. We expect this level to be retested again today.
  • The next support is at 0.7681 the low of 5th July 2013
  • The low of 1st June 2013, 0.7454 is the next major support
  • The Nearest significant resistance are at 0.7800 and 0.7900 major levels
  • The low of 4th February at 0.8050  is another major support

Technical analysis

Weekly Charts

The weekly chart the RSI is indicating that we are at oversold conditions, these conditions have persisted since last week. The current reading for the RSI is 22.96 indicating that we should be anticipating the selling to subside.

The candles are trading below the 21 day moving average. This is an indication that the bearish sentiment persists. This means that the selling pressure is likely to continue for the pair. The two indicators though not necessarily conflicting are at odds with each other. We should thus anticipate that there will be a pause in the selling and a further resumption afterwards.

NZDUSD Weekly 30-09-2014

 

Daily chart

On the Daily chart the RSI shows that the pair is oversold. It has been at oversold conditions since the 23rd of September. Currently the RSI reading is at 16.29. This is a buy signal indicating that the selling pressure may be getting exhausted and the pair may begin to go back up.

On the other had the 21 day moving average is giving a bearish signal. It has been above the candles since its bearish cross on the 15 of July. It is also acting as a reliable resistance for the pair. Every time the price touches the moving average, it sells off back down. This indicates that the exchange rate is likely to keep on falling in the medium term after a temporary consolidation.

 

NZDUSD Daily 30-09-2014

 

4Hour Charts

Thought the RSI is still in oversold conditions, the RSI has moved from 11.85 on this week’s open to 27.4 at London’s Open.  This shows that we can anticipate further consolidation.

On the other hand the candles are trading well below the 21 period moving average indicating a persisting bearish sentiment.

 

NZDUSD H4 30-09-2014

Wrap up

The NZDUSD is on a bearish streak. The moving average on the weekly, daily and 4hourly charts indicate that the bearish pressure will persist. On the other side, the RSI on the weekly, daily and four hourly charts all indicate that the conditions for the pair are oversold.

 The pair is approaching a major level at 0.7700 that it was unable to break through previously. This means that we should anticipate some buying pressures at this level. Taking this into consideration we conclude that the bearish sentiment will persist and expect the pair to fall down further as long as it is trading below the 21 day moving average. We can also anticipate a short term consolidation at the major supports down the way.

A good approach under these conditions will be to wait until the pair breaks well below the 0.7700 level and only take the short trades.

 

James Ansher

James Ansher

When there is a will there is a trade

A successful Forex trader and expert advisor

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