NZDUSD embarked itself on a new bearish cycle after the bulls got defeated once again near the tough resistance trendline drawn from February’s four-year high of 0.7463.
The 0.7000 level could not catch the fall this week, with the price currently seeking shelter near the 0.6930 handle, where bearish actions halted several times over the past few months.
While a rebound at this point cannot be excluded, the momentum indicators are currently flagging that the sell-off has more room to run. With the MACD decelerating below its zero and signal lines, the Stochastics reversing lower again, and the RSI sailing southwards below its 50 neutral mark, downside corrections are more likely than upside ones.
Yet, whether the bearish cycle will last until the bottom of the downward-sloping channel, breaching the previous low of 0.6800 too, that remains to be seen as key obstacles at 0.6930 and 0.6877 could stand in the way.
In the event of an upside reversal, the price will push for a close above the 0.7000 level, where the 50-day simple moving average (SMA) is laying at the moment. Slightly higher, the 20-day SMA at 0.7050 could prevent the bulls from testing the resistance trendline and the 200-day SMA at 0.7110 as it did last week.
All in all, NZDUSD is expected to stay in the bearish phase in the short term, likely facing some constraints around 0.6930 and 0.6877.