NZDUSD spikes through a major support, bulls are in trouble
The sellers took control of the NZDUSD pair after the pair the major resistance level at 0.75508. Majority of the price action traders managed to execute short orders at that level since we had a nice bearish engulfing pattern in the daily chart. The started to lose its momentum after the pair hit the major support level at 0.69301. This level is very crucial for the long-term investors since we have our long-term trend line support. Though we had an initial breach of this level in the daily chart prior to the closing of the last trading week, the bulls managed to regain some control of this market.
NZDUSD daily chart analysis
Figure: NZDUSD testing major support level in the daily chart
From the above figure, you can clearly see the pair is currently testing the major support level in the daily chart. Though we had an initial breach of this support level the buyers are expecting a strong turn around in the upcoming week. If the bulls manage to take control of this market from this level, the ultimate bullish target for this pair would be the 200 days SMA in the daily chart. The short-term traders might set pending orders at the dynamic resistance level at 0.71127. From that level, we might see some false spike towards the 100 days SMA at 0.71726. This is the most critical level and the buyers will have a tough time to clear out this resistance level since we have plenty of resistance candles.
NZDUSD weekly chart analysis
Figure: NZDUSD testing weekly trend line support level
In the weekly chart, we have a very critical condition in the NZDUSD pair. Currently, the pair is testing major horizontal and trend line support level. From this level, we might see some decent bullish bounce but a clear break of the price below the critical support level at 0.68957 will eliminate the bullish momentum in this market. If the bulls manage to take control of this market from this level the pair will eventually lead towards the next major resistance level at 0.71784. The buyers will have to do some hard work to clear out this weekly horizontal resistance level and a valid break of this level will lead this pair towards the high of 23rd July 2017. This level is very crucial for the long-term investors since the bulls failed to clear this resistance level for three consecutive times.
On the downside, we need to break below the current trend line support level to see some bearish action. A valid break of the current support level will eventually lead this pair towards the next support level at 0.63634. From this level, we might see some decent bullish bounce but if this pair reaches this level, there is a high chance we will see a retest of the key support level at 0.61044. Considering all the technical parameters, it’s buying the pair with tight stop will be justified act provided that we have a strong bullish candle in the starting of the next trading week.