NZD/USD edged north yesterday, after it hit support near the 0.6710 level, and today, it managed to break above the downside resistance line drawn from the peak of the 4th of December. The move also brought the rate above the 0.6765 resistance (now turned into support), and now the bulls look to be heading towards 0.6790. Having that in mind, and also that the pair is trading above a new tentative upside support line taken from the low of the 2nd of January, we would consider the near-term outlook to have turned positive.
A clear break above 0.6790 could signal further upside extensions and may set the stage for the 0.6845 zone, marked by an intraday inside swing low formed on the 18th of December. Another break above that hurdle could open the path for our next resistance at around 0.6875, a zone that prevented the price from moving higher on the 13th and 18th of December.
Our short-term momentum studies detect upside speed and support the notion for NZD/USD to keep drifting north for a while more. The RSI rebounded from near its 50 line and now looks to be heading towards 70, while the MACD, already positive, has turned up and just crossed above its trigger line.
On the downside, we would like to see a decisive break back below 0.6710 before we start leaning to the bearish side again. This will bring the rate back below the aforementioned downside line and would also confirm a forthcoming lower low on the 4-hour chart. The bears may then be encouraged to push the action towards the 0.6675 hurdle, the break of which may carry larger negative implications, perhaps paving the way towards the 0.6620 territory.
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