NZDUSD had one of its best trading sessions for this year, this week, gaining more than 1.4% to edge above its short-term moving averages in the daily timeframe and reach a fresh one-month high of 0.6665 on Wednesday.
The technical indicators are still flashing bullish, with the MACD stretching further above its red trigger line and the RSI moving above its 50 neutral level. The red Tenkan-sen line of the Ichimoku cloud could be an indication that the rally is overdone as it is flattening, and hence negative corrections should not be a surprise in coming sessions.
Traders would be eagerly looking for a break above yesterday’s top of 0.6665 to increase buying orders. If that’s the case, the rally could last until the 0.6705 – 0.6720 resistance zone. If bullish forces appear even stronger, 0.6840 should be another barrier to keep in mind.
Should the price retreat, the 40-day simple moving average (SMA) currently at 0.6603 could provide immediate support. Moving lower, the focus will shift to the 0.6560 region, which if broken would increase speculation that the short-term bullish phase has ended, and the way is open for a move back to the seven-month low of 0.6480.
In brief, even though the recent bullish action turned the short-term picture slightly positive, buyers could get more active if the price closes above the longer-term 200-SMA (0.6705).
