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NZD/USD - Finally a Meaningful Correction

The NZD/USD has been pretty much a straight downward path since the end of April after retreating from 0.7742 and thus ending a multi-month consolidation. The daily chart shows the persistent downtrend since May.

NZD/USD Daily Chart 7/28
(click to enlarge)

The daily chart also shows that since mid-July, NZD/USD has neutralized. The consolidation has taken a bit of a bullish attempt this week as price cracks a falling trendline from the 0.7742 high. With this breakout, we can maybe expect some short-term bullish correction. But unless the FOMC announces that it no longer wants to raise rates in the upcoming couple of quarters, we should maintain a bearish outlook on NZD/USD. A good first place to look for resistance will be the support/resistance pivot area around 0.68, In fact, a bearish market might hold resistance even lower than that at the 0.6742-0.6770 resistance area seen in the 4H chart. 

NZD/USD 4H Chart 7/28

(click to enlarge)

This area involves the 200-period SMA in the 4H chart and a support/resistance pivot area. Plus, the RSI would likely be around 70, overbought, area. We can anticipate a clear-out to 0.68 as noted before, but let's start monitoring for resistance around 0.6740.

To the downside, our first target could be just above the 0.66 area, in case the NZD/USD still has more consolidation/correction to go. A break below 0.66 on the other hand would most likely put the 0.6488 low on sight with risk of extending lower in-line with the prevailing trend.