NZD/USD Rate Snaps Bearish Price Series To Defend 2021 Low

With that said, the pullback from the February high (0.7465) may turn out to be an exhaustion in the broader trend rather than a change in NZD/USD behavior like the correction from the January high (0.7315), and the exchange rate may continue to defend the 2021 low (0.7096) as it snaps the series of lower highs and lows from the previous week.

NZD/USD RATE DAILY CHART

Image of NZD/USD rate daily chart

Source: Trading View

  • Keep in mind, NZD/USD cleared the June 2018 high (0.7060) in December as it climbed to fresh yearly highs throughout the month, with the Relative Strength Index (RSI) pushing into overbought territory during the same period as the oscillator established an upward trend in the second half of 2020.
  • NZD/USD took out the 2020 high (0.7241) during the first week of January to come up against the Fibonacci overlap around 0.7330 (38.2% retracement) to 0.7350 (23.6% expansion), with the bullish price action pushing the RSI into overbought territory.
  • However, the move above 70 in the RSI was short-lived as the indicator failed to retain the upward trend from 2020, with the oscillator indicating a textbook sell signal during the first week of January as it quickly fell back from overbought territory.
  • A similar development occurred toward the end of February as NZD/USD pulled back from a fresh yearly high (0.7465), but the exchange rate has slipped below the 50-Day SMA (0.7212) for the first time since November to come up against the January low (0.7096).
  • NZD/USD may continue to defend the 2021 low (0.7096) as it struggles to push below the Fibonacci overlap around 0.7070 (61.8% expansion) to 0.7110 (38.2% expansion), with a move back above the 50-Day SMA (0.7212) bringing the 0.7260 (78.6% expansion) region on the radar.
  • Next area of interest comes in around 0.7320 (23.6% expansion) to 0.7350 (23.6% expansion) followed by the overlap around 0.7450 (38.2% expansion) to 0.7500 (100% expansion).
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