- NZD/USD attracts fresh selling on Tuesday and returns below the 0.6200 level.
- The formation of a descending channel points to a well-established downtrend.
- Negative technical indicators on the hourly/daily charts support the prospect of further losses.
The NZD/USD pair has seen some selling during the European session on Tuesday and has extended the previous day’s retracement from the 0.6250-0.6255 area. At time of writing, the pair is trading back below the 0.6200 round level and remains vulnerable to further downside.
Looking at the slightly bigger picture, the NZD/USD pair has been trending lower along a descending channel that has been going on since mid-June, which points to a well-established short-term downtrend. The negative bias is reinforced by the fact that the oscillators on the daily chart remain deep in bearish territory and have been struggling to gain any significant traction on the hourly charts.
The technical set-up seems to lean heavily in favor of the bears and supports the prospects for an extension of the recent downside move. Therefore, a further pullback towards the yearly low around the 0.6150-0.6145 area hit last Friday remains a distinct possibility. The bears could try to challenge the lower end of the descending channel near the 0.6120 area.
A convincing break of channel support, leading to weakness below the 0.6100 level, would be a fresh trigger for the bears. This, in turn, would set the stage for further losses and make the NZD/USD pair vulnerable to prolonging the bearish path towards the psychological level of 0.6000.
On the other hand, any significant move above 0.6100 could continue to face stiff resistance and remain capped near the 0.6150-0.6155 region. This zone coincides with the upper limit of the descending channel, which if exceeded decisively would nullify the short-term downtrend. This could spark a move towards the 0.6200 round level.
NZD/USD 4 hour chart
-637926036866003258.png)
NZD/USD key levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
