Pullback remains elusive beyond 0.6230
- NZD/USD retreats from a four-month high, snaps three-day uptrend after refreshing multi-day top.
- 61.8% Fibonacci retracement level probes buyers amid overbought RSI.
- Convergence of 200-DMA, monthly support line restricts immediate downside.
NZD/USD pares recent gains at the highest levels since early August as it prints mild losses around 0.6365 during early Friday.
In doing so, the Kiwi pair retreats from the 61.8% Fibonacci retracement level of the pair’s April-October moves, near 0.6460, amid the overbought RSI (14).
That said, the 50% Fibonacci retracement level near 0.6275 lures intraday sellers before highlighting the 0.6230 support confluence, encompassing the 200-DMA and a one-month-old ascending trend line.
Should the quote remains bearish past 0.6230, the odds of witnessing a south-run towards the previous resistance line from early April, near 0.6090, can’t be ruled out.
Alternatively, a daily closing beyond the 61.8% Fibonacci retracement level surrounding 0.6460, also known as the golden ratio, becomes necessary for the NZD/USD buyer’s return.
Following that, a horizontal area around 0.6570 including the tops marked in May and June will be crucial to watch as a break which could give a free hand to the bulls targeting March’s low near 0.6730.
Overall, NZD/USD is likely to decline further but the downside appears limited.
NZD/USD: Daily chart
Trend: Limited downside expected