NZD/USD Price Analysis: Steadily climbs to weekly tops, upside seems limited

The NZD/USD pair gained traction for the second consecutive day and refreshed weekly tops, around mid-0.7100s during the early European session on Wed  |  20/01/2021 09:26
  • NZD/USD edged higher for the second straight day, albeit lacked any strong follow-through.
  • The recent break below the head and shoulders neckline support favours bearish traders.
  • The pair remains vulnerable to slide further to test 0.7040 support ahead of the 0.7000 mark.

The NZD/USD pair gained traction for the second consecutive day and refreshed weekly tops, around mid-0.7100s during the early European session on Wednesday.

The uptick, however, lacked strong bullish conviction and remained capped near a previous horizontal support breakpoint, now turned resistance. The mentioned level marked the neckline of a bearish head and shoulder chart pattern.

The NZD/USD pair's inability to capitalize on the positive move favours bearish traders. The negative outlook is further reinforced by the fact that technical indicators on the daily chart have been losing positive momentum.

That said, oscillators are yet to confirm the near-term bearish bias. Apart from this, the emergence of some dip-buying and resilience below the 0.7100 mark warrants some caution before positioning for any further depreciating move.

Nevertheless, sustained weakness below the 0.7100 mark will set the stage for an extension of the recent corrective slide. The NZD/USD pair might then accelerate the fall towards the 0.7040 area en-route the 0.7000 psychological mark. The latter represents the bearish pattern target, which should act as a key pivotal point and help determine the NZD/USD pair's next leg of a directional move.

On the flip side, immediate strong resistance is pegged near 0.7170-75 region and is closely followed by the 0.7200 mark. Any subsequent strength might be seen as a selling opportunity and runs the risk of fizzling out near the 0.7235 supply zone.

NZD/USD 4-hourly chart

fxsoriginal

Technical levels to watch

 

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