After a prolonged decline that we saw in NZD/USD lately, could the pair be showing signs of a possible recovery towards the upside? Certainly, for now, it seems to be the case, as it looks like that the pair has made a shift upwards, away from its newly-found support at 0.6425, marked by the low of the 26th of January 2016. We could see NZD/USD climbing a bit higher, but only until it would reach the short-term downside line drawn from the peak of the 26th of September. Also, we must remember that on a bigger picture, it continues to trade below its medium-term downside resistance line, taken from the high of the 25th of June.
As mentioned above, we will aim for a bit of retracement back to the upside. The first strong resistance area that the pair could hit, may be at the 0.6500, which was seen acting as strong support for the month of September. This is where the uprise could get stopped by the aforementioned short-term downside line. The bears could see this as a good opportunity to take advantage of the higher rate push NZD/USD back down again. A test and a break of the recently-found support of 0.6425, could open the path towards the 0.6345 obstacle, marked by the low of the 20th of January 2016.
Looking at our oscillators, the RSI has bottomed slightly below the 20 area and has moved higher. The MACD is also showing signs of bottoming and has lifted itself above its trigger line. Both indicators are now pointing higher.
Alternatively, if the previously mentioned short-term downside line is not able to withhold the pressure from the bulls, its break of that line could lead towards higher resistance levels. For us to get comfortable with the possibility of further acceleration of the rate, we would need to see NZD/USD breaking above the 0.6540 zone, marked near the lows of the 17th and the 13th of September. This way, more buyers could start joining in and the pair could easily aim at testing the 0.6575 hurdle, a break of which could set the stage for a further rate rise towards the 0.6630 barrier, marked near the highs of the 28th of September. Also, that barrier acted as the inside swing low on the 25th of September.
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