GBP/NZD traded lower yesterday, after hitting resistance near the 1.9415 zone. The slide was stopped near the 1.9215 area, with the rate rebounding somewhat. However, the pair is still trading below the downside resistance line drawn from the high of May 17th, and thus, we will consider the short-term picture to still be negative.
The bears may take charge again from near the downside line and perhaps aim for another test near 1.9215, or near the 1.9175 territory, which attracted some buyers on May 5th and 6th. If neither zone is able to stop the slide, then we could experience extensions towards the 1.9045/75 area, marked by the lows of May 5th and April 27th.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50, but it has turned up recently, while the MACD, although below both its zero and trigger lines, shows signs it could turn up as well. Both indicators detect slowing downside speed and support the notion for some further recovery before the next leg south.
Now, in order to start examining whether the bulls have gained full control, we would like to see a clear break above 1.9415. This could confirm the break above the aforementioned downside line and may initially target the 1.9490 barrier, marked by the highs of May 26th and 27th. Slightly higher lies the peak of May 24th, which if also broken, could extend the advance towards the high of May 17th, at 1.9670.
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