Technical Analysis – NZDUSD corrects lower but 200-day SMA curbs retreat
NZDUSD experiences a sharp pullback from its 4-month peak
But the 200-day SMA acts as a strong floor for now
Momentum indicators deteriorate but remain in positive areas
Should the price break below the crucial 200-day SMA, immediate support could be met at 0.6064, which is the 38.2% Fibonacci retracement of the 0.6536-0.5772 downtrend. Violating that hurdle, the pair could then descend towards the 23.6% Fibo of 0.5952. A violation of that region could pave the way for the September low of 0.5858.
Alternatively, if the pair attempts to erase the recent correction, the 50.0% Fibo of 0.6154 could prove to be the first barricade for the bulls to clear. Further advances might then cease at the recent four-month high of 0.6221. Failing to halt there, the price could then challenge the 61.8% Fibo of 0.6244.
Overall, NZDUSD experienced a pullback after reaching extremely overbought conditions. Moving forward, the decline could accelerate if the price breaks profoundly below the crucial 200-day SMA.
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