In last week’s analysis of NZDUSD we wrote about pair reaching the supply zone between 0.7333 and 0.7375. There I was expecting a bearish reaction due to several confounding factors that indicated likelihood of such a scenario.
The aforementioned factors were the diagonal support line crossing local support at 0.7257 and the divergence between price action and RSI. As it turned out in yesterday session pair broke support area, which released a strong downward movement to 0.7200.
Currently we are recovering yesterday’s declines which can be used to take short positions. Selling signals may appear after re-test of broken trend line or vicinity of 0.7257. The zone between these levels is currently a resistance.
The key objective remains invariably around 0.7080, where the demand zone is also 50% abolition of last growth pulse from the daily chart.