Forex

NZDUSD aims for an uptrend resumption

NZDUSD is trading positive for the second consecutive day, flirting with last week’s high of 0.6987 after finding strong support near the 20-day simple moving average (SMA) and the 50% Fibonacci retracement of the 0.7217 – 0.6528 downleg.

Technical signals are neutral-to-bullish at the moment as the RSI has resumed its positive momentum after marking a  lower low above 50. The Stochastics are set for a bullish cross, while the MACD is preserving some strength above its red signal line, but is still below its recent highs.

In trend indicators, the 20-day SMA is quickly approaching the 200-day SMA. A positive intersection between those lines could boost hopes that the uptrend off 0.6558 could gain new legs.

The 61.8% Fibonacci level of 0.6998 is overhead and will be closely watched in the coming sessions. A decisive close above that bar could drive the price towards the 78.6% Fibonacci of 0.7070. Should buying pressures grow further, the spotlight will turn to the 0.7169 – 0.7217 key resistance territory.

If the bullish action stalls at 0.7000, the price may drift lower to seek support around the 50% Fibonacci of 0.6872. The area has been a crucial barricade to upside and downside movements since the start of the year, therefore any violation at this point is expected to produce a sharper decline towards the 38.2% Fibonacci of 0.6790 and the 50-day SMA at 0.6858. Moving beneath the latter, the pair could next test the 23.6% Fibonacci of 0.6690.

In summary, NZDUSD is facing a neutral-to-bullish short-term bias. A successful penetration of the 0.7000 level could motivate fresh buying, while a drop below 0.6872 may confirm additional losses.

About the author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics. Previously, she earned a bachelor of science in Economics from the University of Cyprus. Apart from foreign exchange markets, her research interests include the impact of International trade on labour markets and product development.

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