Over the weekend I pointed out why the NZDUSD has been struggling to breach the 0.7320 area on a weekly closing basis. We went all the way out to a monthly chart to view the sixteen-year ascending channel as well as the Fibonacci level that continues to cap advances.
And while we’re still waiting for that close below the 0.7200 handle to signal a material weakness, the price action over the past few hours shows that sellers are beginning to take control.
The trend line that extends from the July 25th low just failed with the latest 4-hour close. This puts the NZDUSD one step closer to breaking down from the thirteen-month rally, which is ultimately corrective when taking into account the last two years of losses.
Today’s breakdown in trend means that the 0.7300 area is likely to attract offers going forward. The next support level remains 0.7200, which is no doubt a substantial area with huge implications for the pair.
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