NZDUSD testing 38.2% Fibonacci retracement level, preparing for bearish dive

The medium-term bullish rally in the NZDUSD pair is now facing strong resistance level in the daily chart. Prior to the closing of the week, the pair managed to breach the 200 days SMA but eventually closed below the dynamic resistance level at 0.71013 and formed a nice bearish pin bar. Though it’s a clear sell signal for the aggressive price action traders, the conservative traders are still on the sideline waiting for bearish confirmation candlestick Patten. However daily closing of the price above the critical resistance level at 0.71013 will invalidate the current bearish sentiment. On the contrary, a clear break of the minor support level at 0.70697 on daily closing will fuel up the bears in the global market.

NZDUSD daily chart analysis

Figure: NZDUSD pair testing the 38.2% Fibonacci retracement level

In the above figure, you can clearly see the failed attempt to breach the 200 day SMA (green line).On the contrary, we have a bearish crossover of the 100 and 200 days SMA which suggest the bears are slowly trying to take control of this market. Those who long had already booked their profit prior to the closing of the trading week. Most importantly we have a significant amount of resistance just above the current price level which erases the fresh buying sentiment from the market. Though we have a bearish pin bar right at the 100 days SMA, the price might go further up to test the 5o% retracement level before going for the financial bearish dive. On the contrary, if the sellers manage to break the 100 day SMA support level then shorting this pair with a tight stop above the 200 days SMA will be a good entry.

NZDUSD weekly chart analysis

Figure: Slowly heading towards the broken trend line resistance

In the weekly chart we have still some room to go north but eventually, the kiwi dollar is most likely to find the extreme level of selling pressure right at the weekly resistance level at 0.71253.In the starting of the next trading week, we might see some consolidated price movement before the bears took control of this market. However, a weekly closing above the critical resistance level at 0.71253 will create a bullish scenario for this pair and the ultimate target will be the 200 weekly SMA. On the contrary, a clear break of the 100 weekly SMA on daily closing basis will create extensive selling pressure on the Kiwi dollar.

The last week candle is extremely bullish and this scenario is holding the price action traders to place their short orders at the current price level. However, the aggressive traders are ready to place short on the NZDUSD pair based on the formation of the bearish pin bar in the daily chart. Considering the over parameters it’s better to look for higher price to place short orders in the NZDUSD pair. But waiting for the sideline for bearish price action signal will be the best option for the conservative traders.