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by Charalambos Pissouros

NZD/USD Completes a “Failure Swing Top”

NZD/USD traded lower yesterday, breaking below the support (now turned into support) zone of 0.6385, thereby completing a failure swing top formation. Although this may have turned the short-term outlook to the downside, we would like to see a decisive dip below 0.6350 before we start examining further declines. That zone acted as a strong resistance on September 25th and October 11th.

If the bears are willing to overcome that hurdle, this would also place the rate below all three of our moving averages on the 4-hour chart and may allow the slide to continue towards the 0.6315 zone, slightly below the inside swing high of October 15th. Another break, below 0.6315, could carry more bearish implications, perhaps towards the 0.6285 zone, near the low of October 17th.

Looking at our short-term oscillators, we see that the RSI lies below 50 and points down, while the MACD, already below its trigger line, has just touched its toe below zero. Both indicators detect downside momentum and support the notion for NZD/USD to continue drifting south for a while more.

On the upside, a break above the high of September 12th, at 0.6450, may be needed for the short-term picture to turn back to positive. Such a break may initially pave the way towards the highs of August 13th and 14th, at around 0.6470, the break of which could open the path towards the 0.6500 zone, which is fractionally above the high of September 9th.

NZD/USD 4-hour chart technical analysis

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