NZD/USD: A Critical Test of Key Support The NZD/USD pair on the H4 chart is currently at a crucial juncture, testing a major horizontal support level around 0.56050. This move follows a protracted bearish trend that has been firmly in place since mid-September. The price action clearly illustrates a strong downtrend, with the pair consistently trading below the two moving averages (which appear to be longer-term, perhaps 50-period and 200-period or similar), confirming the persistent sell-off pressure. The immediate drop seen in mid-September from the 0.6000 area initiated the current phase of decline. Since then, both moving averages have acted as dynamic resistance, successfully capping any significant rallies. The red moving average, representing the longer-term sentiment, has maintained a steep downward slope, underscoring the dominance of bears in this pair. The recent approach to the 0.56050 area is the fourth attempt to break this support since late October.
What to Watch Next: Bearish Continuation: A decisive four-hour candle close below the 0.56050 support level would be a significant bearish signal. This breakdown would open the door for a continuation toward lower lows, with the next psychological target likely being the 0.55000 handle. Given the strong downward momentum suggested by the moving averages, this is the higher-probability scenario. Traders should look for confirmation, such as a retest of the broken support turning into resistance, before entering short. Potential Bounce: While less likely given the current momentum and alignment of the MAs, the 0.56050 support could hold once more. If bulls step in aggressively here, we could see a corrective bounce back toward the blue moving average, which is currently acting as immediate resistance (near 0.56660-0.57000). A confirmed reversal pattern, such as a double bottom or a strong bullish engulfing candle on the H4 timeframe at this support, is required for a long entry to be considered. Even in a bounce scenario, the primary trend remains down, suggesting that any rally would likely be an opportunity for trend-following sellers to re-engage at a better price.
