This Kiwi pair seems to be entering correction mode at the moment, as it approaches a former support zone near a descending trend line.
Will the downtrend resume soon?
NZD/CHF had a pretty rough time during the previous month, as the pair tumbled sharply below the .4750 minor psychological support on a dovish RBNZ decision.
At the same time, the lower-yielding Swiss franc attracted safe-haven demand while traders edged away from the U.S. dollar on account of Fed independence concerns.
Now that the pair is taking a breather from its dive at the beginning of the month, will we see a fresh round of sellers hopping in at key levels?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Swiss franc and the New Zealand dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Price is pulling up close to the 38.2% Fibonacci retracement level near R1 (.4740) and the broken support level, which might be enough to hold as resistance.
A larger correction could still test the 50% level closer to the 100 SMA dynamic inflection point or the 61.8% Fib near the descending trend line, so look out for reversal candlesticks at these areas as well.
A return in bearish vibes could take NZD/CHF back down to S1 (.4700) or S2 (.4670) roughly around the previous month lows.
However, long green candlesticks piercing through the area of interest could suggest that Kiwi bulls (or franc bears) are putting up a strong fight, potentially taking NZD/CHF in for a reversal to the upside targets at R4 (.4810) then R5 (.4840).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
