NZD/USD dips below 0.5850, eyes oversold territory
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The NZD/USD pair extended its losing streak into a fourth consecutive session, trading near 0.5840 during Monday’s European hours. Technical indicators and price action continue to favor a bearish outlook, with the pair edging closer to the oversold zone at the lower boundary of a descending channel, around 0.5810.
Bearish momentum persists amid weak technical signals
The daily chart highlights a strengthening bearish trend, as the NZD/USD remains confined within a descending channel. The nine-day Exponential Moving Average (EMA) sits below the 14-day EMA, reinforcing sustained short-term weakness. Meanwhile, the 14-day Relative Strength Index (RSI) hovers just above the oversold threshold of 30. A breach below this level could indicate an oversold condition, potentially triggering a corrective rebound.
On the downside, support at 0.5810 aligns with the channel’s lower boundary. A decisive break below this level would intensify bearish momentum, potentially driving the pair toward the two-year low of 0.5772, last seen in November 2023. This level is critical for traders monitoring further downside risk, as a breach could signal continued depreciation in the pair.
Upside potential limited by technical resistance
While the broader trend remains bearish, potential rebound levels could emerge if the pair stabilizes near oversold conditions. Immediate resistance is seen at the nine-day EMA, around 0.5873, followed by the 14-day EMA at 0.5895. A breakout above the descending channel’s upper boundary, coinciding with the 14-day EMA, would be required to negate the bearish bias. Such a move could pave the way for the pair to challenge the psychological resistance at 0.6000.
Trading outlook: Navigating the bearish trend
Traders should closely monitor the 0.5810 level as a key support zone. A confirmed breakdown below this threshold would reinforce the bearish narrative, making the two-year low at 0.5772 the next target. Conversely, if oversold conditions prompt a corrective rebound, the EMAs at 0.5873 and 0.5895 will act as pivotal resistance levels.
In this environment, short positions remain favored, particularly below 0.5810, with careful attention to the RSI for signs of a potential reversal. For those looking for upside opportunities, a breakout above 0.5895 could signal the start of a recovery phase, but only a sustained move beyond 0.6000 would shift the medium-term outlook to bullish.
Bearish momentum persists amid weak technical signals
The daily chart highlights a strengthening bearish trend, as the NZD/USD remains confined within a descending channel. The nine-day Exponential Moving Average (EMA) sits below the 14-day EMA, reinforcing sustained short-term weakness. Meanwhile, the 14-day Relative Strength Index (RSI) hovers just above the oversold threshold of 30. A breach below this level could indicate an oversold condition, potentially triggering a corrective rebound.
On the downside, support at 0.5810 aligns with the channel’s lower boundary. A decisive break below this level would intensify bearish momentum, potentially driving the pair toward the two-year low of 0.5772, last seen in November 2023. This level is critical for traders monitoring further downside risk, as a breach could signal continued depreciation in the pair.
Upside potential limited by technical resistance
While the broader trend remains bearish, potential rebound levels could emerge if the pair stabilizes near oversold conditions. Immediate resistance is seen at the nine-day EMA, around 0.5873, followed by the 14-day EMA at 0.5895. A breakout above the descending channel’s upper boundary, coinciding with the 14-day EMA, would be required to negate the bearish bias. Such a move could pave the way for the pair to challenge the psychological resistance at 0.6000.
Trading outlook: Navigating the bearish trend
Traders should closely monitor the 0.5810 level as a key support zone. A confirmed breakdown below this threshold would reinforce the bearish narrative, making the two-year low at 0.5772 the next target. Conversely, if oversold conditions prompt a corrective rebound, the EMAs at 0.5873 and 0.5895 will act as pivotal resistance levels.
In this environment, short positions remain favored, particularly below 0.5810, with careful attention to the RSI for signs of a potential reversal. For those looking for upside opportunities, a breakout above 0.5895 could signal the start of a recovery phase, but only a sustained move beyond 0.6000 would shift the medium-term outlook to bullish.