Kiwi dollar heading towards critical support level, the strong challenge for the bulls

After hitting the critical resistance level at 0.74333 the NZDUSD pair has formed a temporarily double top pattern in the daily chart. In the last trading week, the U.S dollar index surged higher in the global market pushing most of its major rivals lower. The Kiwi dollar dropped near about 130 pips. Currently, the pair is heading towards the major support level at 0.71838.From that level, we might see some decent bullish bounce and any bullish price action confirmation signals will be an excellent opportunity to execute long orders.

NZDUSD daily chart analysis

Figure: NZDUSD pair slowly heading towards the 38.2% Fibonacci retracement level

From the above figure, you can clearly see the price is heading towards the 38.2% Fibonacci retracement level drawn from the low of 17th November 2017 to the high of 25th January 2018.The 38.2 Fibonacci retracement level has also coincided with the 200 day SMA which makes it harder for the sellers to drive the price down. However, a daily closing of the price below the 200 days SMA will ultimately lead this pair towards the next critical support level at 0.71096.This level is also backed by 100 day SMA providing solid support to this pair. On the upside, we need to clear the critical resistance level at 0.74358 to establish strong bullish momentum

NZDUSD weekly chart analysis

Figure: NZDUSD trading at a critical zone in the weekly chart

In the weekly chart, the pair is trading a very critical level. Currently, the pair testing the weekly support level and 200 weekly SMA. If the pair breaks below the weekly trend line support level, the ultimate target for this par would be the next critical support level at 0.67804.This level is very crucial for the long-term investors. The buyers will try hard to recover its bullish momentum. On the contrary, if the pair breaks below the critical support level at 0.67804, the long-term bearish trend will again come into action. The next target for the bears would be the low of 17th November 2017.

On the upside, we need to clear the weekly bearish trend line resistance level at 0.74200.The long-term trend traders will be looking for bearish price action confirmation signal at that level to execute short orders at that level. However, a weekly closing of the price above that level will turn the overall bias of this pair into bullish. The next bullish target for this pair would be the nearest weekly resistance level at 0.77300.

Considering the daily and weekly timeframe analysis, executing short orders at the current price level is definitely not our option as we have plenty of support level. On the contrary in the absence of definite bullish reversal signal, executing long orders at the current price level will be an immature act.