FX.co ★ Technical analysis of NZD/USD for July 31, 2014

Overview:

NZD/USD is expected to consolidate with a bearish bias after hitting a near-two-month low at 0.8461 on Wednesday. It is undermined by the positive dollar sentiment, weak dairy prices and ongoing impact from Reserve Bank of New Zealand Gov. Wheeler's comment last week that the Kiwi's strength is "unjustified and unsustainable" as well as the by signal of a pause in the RBNZ's rate-tightening cycle. But NZD/USD losses are tempered by the NZD-USD interest differential and Kiwi demand on retreating AUD/NZD cross and on buoyant NZD/JPY cross. The daily chart is negative-biased as MACD is bearish, stochastics is staying suppressed in the oversold zone, five and 15-day moving averages are declining.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 0.8430. A break of this target will move the pair further downwards to 0.84. The pivot point stands at 0.8520. In case the price moves in the opposite direction and bounces back from the support level, then it will moves above its pivot point. It is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 0.8585 and the second target at 0.8620.

Resistance levels:
0.8585
0.8620
0.8650

Support levels:
0.8430
0.84
0.8375