EUR/NZD traded higher today, breaking above the 1.6577 barrier, a move that signaled the completion of a short-term inverted head and shoulders formation. Then, the rate continued drifting higher, breaking above the 1.6616 level, defined by an intraday peak formed on February 13th. Although it is too early to assume that this will evolve into a longer-term healthy uptrend, the completion of the H&S suggests that the pair could continue drifting higher for a while more.
In our view, the break above 1.6616 may have encouraged more buyers to join the action, who may probably try to drive the battle towards the 1.6730 resistance zone, defined by the inside swing lows of February 11th and 12th. If they refuse to stop there, then we may experience extensions towards our next key territory, at around 1.6835, marked by the highs of February 12th and 13th.
Looking at our short-term oscillators, we see that the RSI edged north and currently lies near its 70 line. The MACD, already above its trigger line, has just obtained a positive sign. Both indicators suggest accelerating upside speed and support the notion for EUR/NZD to continue climbing higher for a while more.
On the downside, we would like to see a clear dip back below the neckline of the H&S, at around 1.6577, before we start examining whether the bulls have lost the upper hand. Such a move will turn the short-term picture back to flat in our view, and may open the path towards the 1.6465 barrier, marked by the low of February 19th, or the 1.6415 hurdle, defined by the lows of February 15th and 18th.
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