EUR/NZD traded higher on Friday and at the time or writing, it is testing the upper bound of a falling wedge. Although such patterns are usually bullish, we will stand pat for now and wait for the exit out of the formation before we start examining the forthcoming directional move.
A break above the wedge’s upper bound, or even better, a break above Wednesday’s high, at 1.8630, may wake up the bulls, who could initially climb towards the peak of March 26th, at around 1.8900. If they manage to overcome that barrier as well, then we may see them aiming for the high of March 23rd, near 1.9090.
Turning our gaze to our short-term oscillators, we see that the RSI has just poked its nose above its 50 line, while the MACD, although slightly negative, lies above its trigger line and points up as well. It could enter the positive territory soon. Both indicators suggest that the rate may start picking upside momentum soon, but as we already noted, we would like to wait for a break above 1.8630 before getting confident on that front.
On the downside, we would like to see a drop below 1.8245 and the lower bound of the wedge before we assess whether the bears have gained the upper hand. Such a move would confirm a forthcoming lower low and could set the stage for declines towards the low of March 11th, at around 1.7870. Another dip, below 1.7870 could extend the slide towards the low of March 5th, near 1.7635.
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