- As it was expected, beginning of the new week the NZD/USD pair spent in a relatively horizontal and steady movement.
- Namely, the currency rate managed to climb to the 0.7330 level and then made a rebound a started to gradually slide back to the bottom.
- The first target, namely, the monthly S1 at 0.7294 it has already reached.
- As a multiple technical indicators send a strong sell signal, the pair is expected to continue the fall.
- The next likely goal could be the 0.7258 level and, eventually, the 0.7248 level, as the space between them represents not only an accumulation of take profit and limit orders, but also of the loss trades.
- Market sentiment support this scenario as well, as 67% of traders are on this currency pair.
- Finally, 65% of pending orders in the 100-pip range are also set to sell.
In line with expectations, Kiwi continued to lose value against the American Dollar until the pair has reached a support at the 0.7258 level. Since the area below consisted of many loss trades and take profit orders, the currency rate made a successful rebound and started to surge towards the weekly PP at 0.7331.
At the moment, the pair is moving horizontally, being squeezed between the above support level from the bottom and a combination of the 55- and 100-hour SMAs and the monthly S1 from the top. The bearish market sentiment has increased by 1% since yesterday and now amounts to 68%. In addition, a summary of various technical indicators for the upcoming day also send strong sell signals.
This information might mean the pair is still fluctuating in a descending channel, while the little bugle on August 10 simply represents a correction after an announcement of the Official Cash Rate.
Despite the 32-pips appreciation of the Greenback that was caused by a surprising release of information on the US Retail Sales, the currency rate managed to stay within an active descending channel.
Basically, today the Kiwi has to try to restore some of the lost positions and, thus, climb at least to the 0.7279 level. After reaching that target, the rate is expected to make a rebound, because of the additional pressure exercised by the 55- and 100-hour SMAs.
A summary of technical indicators for the 5H and 1D timeframes support this scenario. However, there is a need to take into account a release of data on the US Building Permits, which, depending on the result, might accelerate the fall or help the pair to clear a path to the top.