EUR/NZD traded higher today after hitting support near the 1.6245 level. Overall, the rate continues to trade above the upside support line drawn from the low of Apr. 5, and thus, we continue to see a positive near-term picture. However, we will get more confident about a trend continuation if we see a clear break above 1.6405, marked by the high of May 2.
This will confirm a forthcoming higher high on the 4-hour chart and may initially target the 1.6540 zone, marked by the inside swing low of Jan. 5. If the bulls don’t stop there, we could see them climbing towards the 1.6660 zone, marked by the inside swing low of Feb. 24, the break of which could extend the advance towards the high of that same day, at 1.6780.
Shifting attention to our short-term oscillators, the RSI rebounded after hitting support near its 50 line, while the MACD lies positive, slightly below its trigger line. It could cross above that line soon.
Both indicators detect positive price momentum, supporting the notion of further advances in this exchange rate. However, the fact that the MACD is still below its trigger line credence to our view of waiting for a break above 1.6405.
On the downside, we would like to see an apparent dip below 1.6075 before we start examining a bearish reversal case. The rate will already be well below the upside line taken from the low of Apr. 5, and the bears may get encouraged to push the action down to the 1.5925 barrier, marked by the low of Apr. 20.
If they don’t stop there, we may see them targeting the 1.5845 zone, marked by the low of Apr. 14, the break of which could extend the fall towards the low of Apr. 13, at 1.5700.
