NZDUSD has been flowing above the 200-day simple moving averages (SMA) the past couple of sessions, avoiding a close below the 0.7000 round level, while the bounce on the broken descending trendline can also be taken as another encouraging sign that buyers are looking to control the market.
In technical indicators, the 20-day SMA has pierced above the 50- and 200-day SMAs, raising some optimism that the pair could create more higher highs and higher lows.
As regards the price momentum, the latest rebound in the RSI and the Stochastics suggest upside pressures may dominate, though the bulls will probably need to clear the nearby 0.7215 resistance to take the helmet. If that is the case, the price could pick up steam towards May’s top of 0.7315, where a tentative long-term descending trendline stretched from the 2014 top of 0.8835 could put an end to the intense gains. If not, the focus may next turn to the soft barrier of 0.7360 from late February, which coincides with the 161.8% Fibonacci extension of the latest 0.7169 – 0.6858 downfall.
Should sellers come into play, the price may seek footing within the 0.7100 – 0.7060 zone, formed by the longer-term SMAs and the dissolved trendline. Breaching that base, the decline could sharpen towards the 0.7000 mark, while deeper, the spotlight will fall on the 0.6906 – 0.6858 support area.
In brief, NZDUSD is expected to trade positively in the short term, though downside risks may not evaporate unless the price rallies beyond the 0.7215 barricade.
