The NZD/USD pair retraced its recent gains during European trading hours on Monday, hovering around 0.5850. This level marks a critical test for the pair, which is grappling with the lower boundary of a descending channel pattern, signaling a bearish bias on the daily chart.
Technical Indicators:
- EMAs: The nine-day Exponential Moving Average (EMA) remains below the 14-day EMA, pointing to continued weakness in short-term momentum.
- RSI: The 14-day Relative Strength Index (RSI) near the oversold level of 30 suggests the possibility of an upward correction, despite prevailing bearish sentiment.
Support and Resistance Levels:
- Support: The psychological level of 0.5850 aligns with the channel’s lower boundary, serving as a critical support zone. A decisive break below could extend the downtrend toward the two-year low of 0.5772, last reached in November 2023.
- Resistance: On the upside, immediate resistance is seen at the nine-day EMA at 0.5901, followed by the 14-day EMA at 0.5928, which coincides with the channel’s upper boundary. A breakout above these levels could shift momentum, targeting the psychological mark of 0.6100.
Outlook:
The NZD/USD pair’s near-term direction hinges on its ability to hold above the 0.5850 support level or break decisively through the resistance levels outlined. Traders should monitor these key levels closely for signs of either continued bearish pressure or a potential corrective rebound.
