Breach of 20-day SMA support opens door to further declines

  • NZD/USD faced heav losses, breaching the previously held 20-day SMA support, now resistance.
  • The technical outlook transitions towards a bearish sentiment, following Wednesday’s sharp decline.
  • Bears broke the 20-day SMA and are eyeing the strong support formed by the convergence of the 100 and 200-day SMAs near 0.6070.

On Wednesday, the NZD/USD dropped, losing more than 0.70% to 0.6080, obliterating its support at the 20-day Simple Moving Average (SMA), which was regained last week and tainted the outlook with red.

As for the daily technical indicators, the Relative Strength Index (RSI) is currently at 43, showing a downward trajectory, indicating a considerable decrease in buying momentum compared to Tuesday’s close at 52. The Moving Average Convergence Divergence (MACD) printed a fresh red bar, suggesting an increasing bearish momentum.

NZD/USD daily chart

In terms of resistance for bulls to recover, the immediate challenge lies at the 0.6115 level (20-day SMA) now turned into resistance, and then at 0.6150. A decisive close above these levels will be crucial to negate the recent bearish momentum and might assist bulls in making a fresh attempt to reclaim control.

On the downside, immediate support is near the crucial convergence of 100 and 200-day SMAs at 0.6070. A conclusive break below this level could affirm the negative outlook, triggering a deeper corrective slide towards 0.6050 and then the 0.6030 support levels.

Source: https://www.fxstreet.com/news/nzd-usd-price-analysis-breach-of-20-day-sma-support-opens-door-to-further-declines-202407102143