NZD/USD traded higher yesterday, breaking above Monday’s high of 0.6925, thereby confirming a forthcoming higher high on the 4-hour chart. Overall, the pair is trading above the upside support line drawn from the low of Jan. 28, and thus, we will consider the near-term outlook to be positive.
At the time of writing, the rate looks to be pulling back from the 0.6975 zone, and there is a decent chance we see some further declines, even back below the 0.6925 barrier. Nonetheless, we still believe that the bulls could take charge again, perhaps from near the 0.6865 zone, marked as a support by yesterday’s low. This could result in advances towards and above the 0.6975 barrier, with the next stop perhaps being the peak of Nov. 22nd, at 0.7015. If the bulls don’t stop there, then we may see them challenging the 0.7050 zone, near the high of Nov. 18.
Shifting attention to our short-term oscillators, we see that the RSI, although above 50, turned down after hitting resistance at 70, while the MACD, although above both its zero and trigger lines, has started turning down as well. Both indicators detect slowing upside speed, which adds credence to the view that some further setback may be in the works before the next leg north.
On the downside, we would like to see a strong dip below 0.6727, marked by the low of Mar. 15, before we start examining whether the bears are in full control. This could confirm the break below the aforementioned upside line, and may initially pave the way towards the low of Feb. 28, at 0.6675. Another break, below 0.6675, could extend the slide towards the 0.6630 barrier, marked by the low of Feb. 24, or towards the 0.6590 zone, which acted as a key support on Feb. 4 and 14.
