GBP/NZD traded slightly higher on Monday, after sliding on Friday. Overall though, the broader path remains to the downside and this is marked by the downside resistance line drawn from the high of April 16th, as well as by a steeper one, taken from the peak of May 15th. Another technical indication of bearishness is the fact that the rate is trading below all three of our moving averages on the 4-hour chart. So, having all these signs in mind, we will consider the near-term outlook to be negative.
Even if the pair drifts a bit higher, it may be stopped near the downside line taken from the peak of May 15th, or near the 1.9636 zone, marked by Thursday’s and Friday’s highs. The bears may take back control from near these resistance zones and perhaps push the rate below the 1.9376 zone, which is marked by the lows of June 8th and 9th. Such a move would confirm a forthcoming lower low and may see scope for extensions towards the 1.9050 territory, which provided strong support between August 26th and September 9th.
Taking a look at our short-term oscillators, we see that the RSI lies fractionally below 50, but points up, signaling willingness to move above that equilibrium barrier. The MACD is slightly positive and has just poked its nose above its trigger line. Both indicators suggest that some further upside may be in the works before the next negative leg, perhaps for the rate to challenge the shorter-term downside line or the 1.9636 hurdle.
In order to start examining the case of a larger correction to the upside, we would like to see a break above 1.9636. This may allow the recovery to continue towards the 1.9766 zone, which provided decent support on May 27th and 29th, the break of which may take the pair close to the downside line taken from the high of April 16th, or it could result in a test near the psychological zone of 2.0000.
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