NZDUSD refused to return to the bottom of its downtrend earlier this week, pivoting once again near the 0.6600 round level to retest the 20-day simple moving average (SMA) at 0.6640, which has been constraining bullish actions for almost a week now.
The way higher, however, looks to be bumpier and the bulls will need to breach a few more barriers before they stage a meaningful rally. The RSI and the MACD are also reflecting some caution among traders. Although they keep progressing, the former is still beneath its 50 neutral mark and the latter is within the negative zone for the third consecutive month.
The 23.6% Fibonacci retracement of the 0.7217 – 0.6528 downleg at 0.6690 could immediately cease any upside movements above the 20-day SMA. Within breathing distance, the 50-day SMA could also prove a tough obstacle along the tentative descending trendline at 0.6730, while the 38.2% Fibonacci of 0.6790 could prevent an acceleration towards the previous high of 0.6889 and the resistance trendline currently sitting around 0.6900.
On the downside, a pullback below the 20-day SMA could initially seek support around 0.6600. If this floor cracks this time, the bears may again attempt to build the downward structure below January’s low of 0.6528 and the 0.6500 level with scope to reach the June 2020 limitations around 0.6378.
In brief, NZDUSD is expected to push for more gains in the short-term following the bounce above 0.6600. Yet, whether any upside corrections will be strong enough to boost buying confidence above 0.6730 remains to be seen.
