NZDUSD Sets A Foothold To Fight Key Resistance

NZDUSD pushed above the four-month low of 0.6942 to test the 20-day simple moving average (SMA), which has been capping bullish actions since the start of March. The line, which is currently hovering around 0.7074, is a hurdle for the third consecutive day, and the slowing pace in the RSI, as well as the easing momentum in the Stochastics, are providing little optimism for another bullish extension.

Nevertheless, as long as the red Tenkan-Sen and the 50% Fibonacci retracement of the 0.6587 – 0.7463 up leg maintain a strong footing within the 0.7000 – 0.7025 area, the bulls will keep pressing higher. More buyers could enter the market if the price runs beyond the restrictive line and the 38.2% Fibonacci of 0.7130, opening the way towards the 23.6% Fibonacci of 0.7256.

Otherwise, should the pair slide below 0.7000, the bears will quickly sail towards the 0.6942 trough, a break of which could halt somewhere between the 200-day SMA and the 61.8% Fibonacci of 0.6866. Lower, the 78.6% Fibonacci of 0.6775 could next gather attention.

In brief, the short-term risk is looking neutral-to-bearish for NZDUSD. A bounce above 0.7130 could eliminate downside risks, while a drop below 0.7000 could bring sellers back into play.