NZD/USD edged north on Monday, breaking above the resistance (now turned into support) barrier of 0.7025, marked by Thursday’s high. Last Wednesday, the rate emerged above 0.6975, the upper bound of a short-term sideways range that had been containing the price action since the 18th of May and thereafter, the pair has started printing higher peaks and higher troughs. Thus, we would consider the near-term outlook to have turned positive for now.
If the bulls are willing to stay in the driver’s seat and manage to overcome the 0.7050 obstacle, then we may see them driving the battle towards our next resistance of 0.7095, defined by the peaks of the 26th and 27th of April. If that level fails to stop the pair from rising further, then we could experience extensions towards the 0.7135 zone.
Taking a look at our short-term momentum indicators, we see that the RSI rebounded from near its 50 line and now looks ready to cross above 70, while the MACD, already positive, has just poked its nose above its trigger line. These two oscillators detect positive momentum and support our view that NZD/USD may be poised to continue trading north for a while more.
On the downside, we would like to see a clear and decisive dip back below 0.6960 before we abandon the bullish case. Such a dip would bring the pair back within the aforementioned sideways range and could see scope for extensions towards the range’s lower end, near 0.6885.
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