NZD/USD Technical Analysis: Thursday's drop confirmed bearish Doji reversal
- NZD/USD's daily chart is reporting a bearish Doji reversal pattern.
- Key indicators are beginning to roll over in favor of the bears.
NZD/USD is looking south, having carved out a bearish candlestick pattern over the previous two trading days.
The pair created a Doji candle on Dec.31, signaling bullish exhaustion and closed well below that candle's low of 0.6717 on Jan.2, confirming a bearish Doji reversal pattern.
Further, the 14-day relative strength index (RSI) has rolled over from above-70 or overbought territory, suggesting scope for technical correction and has violated the ascending trendline, validating the bearish Doji reversal setup. Also, the MACD histogram is reporting a bearish divergence.
The pair, therefore, risks falling to the ascending 10-day moving average (MA), currently at 0.6671. At press time, NZD/USD is trading at 0.6695.
A strong bounce from the ascending 10-day MA is needed to revive the short-term bullish setup.
Daily chart
Trend: Bear Doji reversal
Technical levels
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