Looking at the four-hour timeframe of the Kiwi dollar against the US dollar (NZDUSD), no overall trend is clear. Volatility has been fairly high over the past couple of weeks. The most important area on this chart seems to be 0.647 to 0.65. This was the source of a strong upward movement from the end of last month. Price continues to test this area today. The high resistance around 0.667 is probably not as strong, but this area might still withstand testing.
Moving averages in general suggest a sell signal. Price remains below all four simple moving averages on this timeframe. However, we can see that only the 20 SMA from Bands has death crossed the longer, more reliable MAs. The 50, 100 and 200-period SMAs remain above each other. This combined with the extending deviations of Bollinger Bands indicates higher volatility. The most likely near-term resistance from MAs is 0.6535 at the middle Band. Beyond this, the near-convergence of the 100 and 200 SMAs around 0.6565 could be a key area.
NZDUSD was very strongly oversold on this timeframe at the end of last week. The penultimate candle on Friday was completely outside the lower deviation of Bands (20, 0, 2). The stochastic line (15, 5, 5) also read below 10. Now we can observe that the stochastic line has moved above the signal line within oversold and price has moved significantly away from the lower Band. MACD (12, 30, 9) seems to support the stochastic’s buy signal. The histogram has converged slightly upward with the signal line.
Price action on this timeframe suggests some upward potential for NZDUSD. We can notice somewhat lower downward momentum on Friday night leading to a doji for last week’s final candle. Price has since moved up from today’s higher opening, although momentum upward also seems to be fairly weak.
The 23.6% Fibonacci retracement level coincides with the area of the 20 SMA from Bands. This suggests that 0.6535 might be an important area of resistance. We can also note that 38.2 Fibo is only slightly below both the 100 and 200 SMAs. Finally, the 50 SMA has met 50 Fibo at the time of writing, so this would be the third important resistance on this timeframe.
Overall, this configuration of indicators suggests that an upward movement is favorable on this timeframe for NZDUSD. Conversely, traders must monitor key fundamental events this week, most importantly the Fed’s meeting on Wednesday evening.
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