FxWirePro: NZD/USD hovers around 20-DMA at 0.74 after bearish gap down open, break below to see further downside

• Solid US non-farm payrolls result (Friday) eased Fed fears on the earnings front, boosted hopes of rate hike.
   
• US dollar had its strongest close on Friday, NZD/USD closed in the red, but held above 20-DMA support.
   
• The pair is trading a narrow range on the day, down 0.08% as we write, after opening with a bearish gap.
   
• Technical studies also support downside. We note bearish RSI divergence, rollover of Stochs and RSI from overbought levels and bearish MACD crossover. 
   
• All eyes are focused on the RBNZ this week, with equal chances that the next move in the OCR could be up or down.
   
• RBNZ’s survey of inflation expectations (later today) will also be watched, a surprise in either direction could well influence the RBNZ’s MPS later in the week. 
   
• 20-DMA is strong support at 0.7403. Break below is required for further downside. Test of 50-DMA at 0.73 then likely.

Support levels - 0.7388 (20-DMA), 0.7333 (July 20 low), 0.73, 0.7284 (50-DMA) 

Resistance levels - 0.7458 (July 21 high), 0.7465 (5-DMA), 0.75 (trendline), 0.7558 (July 27 high)

Call update: Our previous call (http://www.econotimes.com/FxWirePro-Kiwi-dented-after-big-miss-in-NZ-employment-change-short-NZD-USD-rallies-833168) has hit TP1&2. 

Recommendation: Watch out for break below 20-DMA for further downside.

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