NZD/USD surged yesterday, breaking above the short-term downtrend line drawn from the peak of the 16th of February. The rally has also confirmed a forthcoming higher high on the 4-hour chart and turned the near-term picture positive in our view. After the jump, the pair hit resistance at 0.7310 and retreated somewhat, but given that it trades above a potential new uptrend line, taken from the low of the 1st of March, we believe that there is a decent likelihood for the bulls to jump in again soon.
If buyers manage to take the reins from current levels, then we would expect them to target once again the 0.7310 level, the break of which could carry more upside extensions, perhaps towards our next resistance of 0.7345, defined by the peak of the 26th of February.
That said, shifting our attention to our short-term oscillators, we stay cautious that further retreat may be on the cards before the next positive leg. The RSI has topped slightly below its 70 line, while the MACD, although above both its zero and trigger lines, shows signs that it could start topping as well.
A dip below 0.7275 could confirm the case of a retreat and perhaps aim for our next support of 0.7245. Nevertheless, even in this case, the rate would still be trading above the aforementioned new upside support line and thus, we would treat such a slide as a corrective move. We would like to see a clear dip below the new tentative uptrend line before we start examining the case for a shift back to the downside. Such a dip may initially aim for the 0.7205 support, marked by the low of the 5th of March.
