- NZD/USD recovers from three-week-old horizontal support area to snap two-day downtrend.
- Oversold RSI (14) line favors corrective bounce but convergence of 200-SMA, 50% Fibonacci retracement guards immediate upside.
- Multiple hurdles toward the north, bearish MACD signals prod Kiwi pair buyers.
NZD/USD pares the biggest weekly gain since late January as it picks up bids to refresh its intraday high near 0.6220 heading into Monday’s European session. In doing so, the Kiwi pair takes a U-turn from three-week-long horizontal support, amid an oversold RSI (14) line, to print the first daily run-up in three.
That said, the quote’s latest rebound pushes back the NZD/USD prices above the 61.8% Fibonacci retracement of its March-April upside.
However, a convergence of the 200-SMA and 50% Fibonacci retracement, near 0.6230-35, guards the NZD/USD pair’s immediate upside.
Following that, a quick run-up towards the 38.2% Fibonacci retracement level of near 0.6270 can’t be ruled out. Though, the 0.6300 and mid-April high of around 0.6315 could challenge the Kiwi pair’s further advances before directing the bulls towards the yearly top marked the last month around 0.6385.
On the other hand, a daily closing below the aforementioned horizontal support comprising levels marked since April 25, around 0.6190, could recall the NZD/USD bears targeting the monthly low of 0.6110.
Though, multiple levels marked near the 0.6100 round figure and the yearly low marked in March around 0.6085 could challenge the Kiwi pair sellers afterward.
NZD/USD: Four-hour chart
Trend: Limited upside expected
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According to the latest currency analysis, the NZD/USD pair is on its way to further recovery if it eventually manages to break out above the 0.6230-35 resistance zone. The price has been consolidating in a narrow range within the 0.6135-0.6225 region, with supportive influences from the strong New Zealand Dollar, as well as short-term positioning of traders.
Techincally, analysts have pointed out the ascending triangle pattern which has been formed since the beginning of this month, suggesting that the NZD/USD could move towards a break-out soon. Recently, it has been hovering near the 0.6235 level and if it pushes up and reclaims 0.6230-35 with a clear daily close, it would pave the way for further strength.
On the upside, the price might find immediate resistance near the 0.6263-67 zone but only a sustained break-out above 0.6230-35 could open up potential upside potentialtowards 0.6300. Any further up-move could be limited by 0.6320-24 support-turned-resistance area.
To sum it up, a sustained clearing of the 0.6230-35 resistance zone is required for the price to move further upward. Otherwise, a break down below 0.6225 could renew selling interest and drag back NZD/USD lower to 0.6200. Any downside push could be limited by 0.6170 in the near-term.
