NZD/USD is expected to extend its downside movement. The pair accelerated on the downside after it broke below its 20-period and 50-period moving averages. The declining 20-period moving average just crossed below the 50-period one and maintains the downside bias. The relative strength index broke below 30. On the forex front, the New Zealand dollar plunged 1.3% to 0.7023 against the US dollar (previous close: 0.7113) this morning after the Reserve Bank of New Zealand announced tightened loan rules to curb speculation in the housing market, which investors viewed as a move to pave the way for another interest rate cut next month.To sum up, as long as 0.7125 holds on the upside, the pair is likely to drop to 0.7000 at first, and then even to 0.6975.
Recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 0.7000. A break below this target will move the pair further downwards to 0.6975. The pivot point stands at 0.7125. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 0.7155 and the second one, at 0.7190.
Resistance levels: 0.7190, 0.7215, 0.7250
Support levels: 0.7000, 0.6975, 0.6915
The material has been provided by InstaForex Company - www.instaforex.com