The New Zealand dollar traded lower against the US dollar and recently tested the 0.7720 support area. The NZDUSD pair is currently trading around an important area, so it would be interesting to see how the pair trades during the coming sessions. There are several risk events lined up during the coming sessions having the potential to cause swing moves in the US dollar. The 0.7720-00 area holds a lot of important in the near term, and as long as the pair is trading above the same more gains cannot be denied.
There is a descending channel formed on the 4 hour chart of the NZDUSD pair, which has acted as a support and resistance on a number of occasions. The pair is currently testing the channel support area and it looks like that there is a possibility of a bounce from the current levels as the 0.7720 support area represents a major support area. If the pair bounce from the current levels, then it might head towards the 23.6% fib retracement level of the last leg from the 0.7799 high to 0.7728 low which is just below the channel resistance area. So, the NZDUSD pair might struggle around the mentioned resistance area and could trade lower again in that situation.
On the downside, a break below the channel support area might call for a test of the 0.7700 support area. Any further losses should be limited considering we have several important releases lined up in the short term.
Overall, one might consider staying on the sidelines as long as the pair is around the 0.7700 area.
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Posted By Simon Ji of IKOFX
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