NZD/USD: Highs may be redefined before deep retracements develop - Westpac

According to Tim Riddell, Research Analyst at Westpac, daily momentum has broken lower from relatively neutral levels and NZD may test rising trend channel support within potentially deep retracements.

Key Quotes

“The depth of current slippage is critical. Trend support needs to hold if potential for a (final?) squeeze to retest 2016’s high is to be sustained.”

“Weekly

• Weekly momentum may be at neutral levels but is rolling lower. This underscores the potential for a sound test of rising channel support (currently around 0.6980)
• Bias remains for trend and short term retracement support to hold and allow for another up-leg to test 0.7480-0.7500, before deep range retracements form”

“Monthly

• Channel support is under threat again as momentum, though not at extremes, has become more neutral
• Potential for another squeeze should not be cast aside, but longer term bias is for deeper corrective pullbacks within the context of a broad consolidation”