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12 Jun 2013
Flash: NZD/USD divergence points lower to 0.7725 – ANZ
FXstreet.com (New York) - According to Tim Riddell, Head of Global Markets Research at ANZ, “NZD/USD slippage below 0.7900 may not negate mounting divergence in momentum indicators, but it highlight the potential of further extensions to 0.7725 or even 0.7600.”
That being said, and given the level of daily divergence, a close back above 0.7900 could trigger a period of corrective squeezes. However, such rebounds should be contained by resistance around 0.8100 before another down-leg develops.
The series of moves above 0.8400 into 2013 appear completed a broad but interim corrective rally within larger scale consolidation patterns off the 2011 high (0.8845). “Even if rebounds develop in the near-term, this broader pattern suggest that further weakness should develop for a slide to retest the post 0.8845 lows and target and retracement levels in the 0.7335-0.7460 area.” Riddell adds.
That being said, and given the level of daily divergence, a close back above 0.7900 could trigger a period of corrective squeezes. However, such rebounds should be contained by resistance around 0.8100 before another down-leg develops.
The series of moves above 0.8400 into 2013 appear completed a broad but interim corrective rally within larger scale consolidation patterns off the 2011 high (0.8845). “Even if rebounds develop in the near-term, this broader pattern suggest that further weakness should develop for a slide to retest the post 0.8845 lows and target and retracement levels in the 0.7335-0.7460 area.” Riddell adds.