NZDUSD Tests Critical Channel Support

The New Zealand Dollar (NZD) extended downside movement against the US Dollar (USD) on Wednesday, dragging the price of NZDUSD to less than 0.6630 despite the release of worse than expected US consumer confidence news. The technical bias already remains bearish because of a Lower Low in the recent downside move.

Technical Analysis

As of this writing, the pair is being traded near 0.6621. A support may be noted near 0.6600, the confluence of psychological number as well as channel support as demonstrated in our daily chart ahead of 0.6346, the swing low of the last major downside move on the daily chart.

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On the upside, the pair is likely to face a hurdle near 0.6750, the swing high of the last major upside rally as well as the psychological number ahead of 0.6882, the swing high of December 2015. The technical bias will remain bearish as long as the 0.6750 resistance area is intact.

US Consumer Confidence

Consumers confidence fell in February to the lowest level in seven months, as American became a bit more pessimistic about job prospects and business conditions. Big losses in the stock market in early 2016 also added to the anxiety.

The consumer confidence index dropped to 92.2 from a revised 97.8 in January, the Conference Board said Tuesday. Economists polled by MarketWatch had expected a smaller decline to 96.9.

Trade Idea

Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy if we get a valid bullish reversal candle on the daily chart.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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