EUR/NZD traded lower today, after it hit resistance at 1.6825, slightly below the downside resistance line drawn from the peak of October 16th. As long as the rate continues to trade below that line, we would consider the near-term outlook to be negative.
If the bears are strong enough to stay in the driver’s seat, we could soon see them challenging the 1.6690 zone, marked by Wednesday’s and Thursday’s lows. If they managed to overcome that zone, they could then aim the 1.6625 area, which provided support between December 26th and 31st. Another move lower would confirm a forthcoming lower low on the daily chart and could allow declines towards 1.6575, marked as a support by the low of July 25th.
Taking a look at our short-term oscillators, we see that the RSI turned down and now appears ready to fall below 50, while the MACD, although slightly above both its zero and trigger lines, has topped and looks able to cross back below its trigger. These indicators suggest that EUR/NZD may start gathering downside speed again soon and corroborate our view for further declines.
On the upside, we would like to see a strong break above 1.6870, marked near Wednesday’s high, before we start examining the bullish case. Such a move could confirm the break above the downside resistance line drawn from the high of October 16th, and may encourage advances towards the psychological zone of 1.7000, which provided resistance on December 11th and 17th. Another break, above 1.7000, could extend the gains towards the 1.7055 hurdle, marked by an intraday swing high formed on December 2nd.
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