NZD/USD Breaks the Upper End of a Sideways Range | Technical Analysis

NZD/USD traded higher on Thursday, breaking above the upper bound of the sideways range that had been containing most of the price action since November 25th. In our view, this has changed to short-term outlook to positive for now.

We believe that the bulls could soon challenge the 0.6895 barrier, marked by the high of November 25th, the break of which could trigger extensions towards the high of November 23rd, at 0.6955. If they are not willing to stop there, then we could see them aiming for the inside swing low of November 22nd, at 0.6982, or the high of November 22nd, at 0.7013.

Shifting attention to our short-term oscillators, we see that the RSI lies above 70, but turns down, while the MACD runs above both its zero and trigger lines, but slows down as well. Both indicators detect strong upside speed, which supports the notion for further advances in the near term, but their slowdown suggests that a small setback may be looming before the next positive leg, perhaps after the bulls challenge the 0.6895 level.

Now, in order to start examining the bearish case, we would like to see a clear dip below the lower end of the aforementioned range, at around 0.6735. This could initially aim for the 0.6700 zone, which provided support on December 15th and 20th, where another break could see scope for larger declines, towards the 0.6615 barrier, which is marked as a support by the low of November 4th, at 0.6615.


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