NZD/USD traded lower on Friday after it hit resistance near the 0.6875 zone. The slide continued today as well, with the rate hitting support at 0.6775 and then rebounding somewhat. Overall, the rate remains above the upside support line drawn from the low of Jan. 28, and thus, we will consider the near-term outlook to be positive.
A break above 0.68165 could confirm the trend’s continuation and may pave the way towards the peak of Mar. 10, at 0.6875. Another break, above 0.6875, could extend the advance towards the 0.6925 barrier, marked by the peak of Mar. 7, and if the bulls are not willing to stop there either, then we may see them climbing towards the 0.6960 or 0.6980 hurdles, marked by the high of Nov. 23, and the inside swing low of Nov. 17.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from slightly above its 30 line, while the MACD, although below both its zero and trigger lines, shows signs it could start bottoming as well. Both indicators detect slowing downside speed and add to the view that the latest retreat may already, or soon, be over.
To start examining the bearish case, we would like to see a clear and decisive dip below 0.6740, the low of Mar. 1. This could confirm the break below the upside support line drawn from the low of Jan. 28, allowing extensions towards the 0.6675 zone, marked by the low of Feb. 28.
If the sellers are strong enough to overcome that barrier as well, then we may see them pushing towards the low of Feb. 24, at 0.6630, where another break could see scope for extensions towards the 0.6590 zone, marked by the lows of Feb. 4 and 14.
