- NZD/USD struggled to preserve its intraday gains to one-week tops.
- The formation of a flag pattern supports prospects for further losses.
The NZD/USD pair surrendered a major part of its intraday gains to one-week tops and was last seen trading in the neutral territory, around the key 0.7000 psychological mark.
The recent bounce from four-month lows stalled near a resistance marked by the top boundary of an upward sloping channel. Given last week’s steep fall, the mentioned channel constitutes the formation of a bearish continuation flag pattern on hourly charts. The negative outlook is reinforced by the fact that technical indicators on the daily chart are still holding deep in the bearish territory. This, in turn, supports prospects for further losses amid a strong bullish sentiment surrounding the US dollar.
Meanwhile, oscillators on the 1-hourly chart have been gaining some positive traction and recovered from the bearish zone on the 4-hourly chart. The set-up favours intraday bullish traders, through any positive move might still be seen as a selling opportunity. That said, it will be prudent to wait for a sustained break below the 0.6990-85 confluence region before placing fresh bearish bets. The said area comprises the trend-channel support and 100-hour SMA, which should act as a key pivotal point for traders.
Some follow-through weakness will confirm a fresh bearish breakdown and drag the NZD/USD pair back towards multi-month lows, around the 0.6945-40 region. The downward momentum could further get extended towards challenging the 0.6900 round-figure mark. On the flip side, any attempted recovery might continue to confront stiff resistance and remain capped near the top end of the channel. The mentioned barrier is pegged near the 0.7030-40 region, which if cleared might trigger some aggressive short-covering move.
NZD/USD 1-hourly chart
Technical levels to watch
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