Preparing a corrective pullback towards 0.6800 on the double top formation

  • Kiwi bulls failed to record a new yearly high above 0.6926, leading to a double formation at the top.
  • A range shift of the RSI (14) towards 40.00-60.00 indicates further consolidation activity.
  • Bulls are hoping above 0.6923 which will send the asset towards 0.7000.

NZD/USD has been hovering in a narrow range of 0.6866-0.6923 since Thursday after failing to print a new yearly high above 0.6926. Kiwi bulls drew strong offers near 0.6923 on Monday, signaling a corrective pullback going forward. Moreover, the asset has to wait a little longer to resume the rally.

On an hourly scale, NZD/USD saw decent selling pressure after the successful test of the March 7 high at 0.6923. Usually, a failure to print new highs means investors saw it as an expensive gamble and opted for the stock distribution. The trendline placed from the February 24th low at 0.6630, adjoining the March 15th low at 0.6729, will remain a major support for the asset.

It should be noted that the Relative Strength Index (RSI) (14) has moved into a range of 40.00-60.00 from a bullish range of 40.00-60.00, which signals either a consolidation or a downward move in the upcoming trading sessions.

If the asset breaks below the minor trendline around 0.6866, which is placed from the March 17 mid-traded price at 0.6865, the asset will slide near the March 10 low at 0, 6811, followed by the larger trendline placed from the Feb 24th low of 0.6630 to 0.6785.

For the upside, the bulls need to break above the March 7 high at 0.6923, which will push the Kiwi bulls up to the November 23, 2021 high at 0.6965. The breakout of the latter will push the pair towards the psychological barricade at 0.7000.

NZD/USD hourly chart