NZDUSD’s Fresh Bullish Impetus Put Under the Microscope

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NZDUSD is poised to face the lower band of the Ichimoku cloud, which intersects with a possible limiting trend line drawn from the 0.7216 high, putting the resilience of the progressive price rebound of the 16-month low of 0.6528 to the test. The longer-term 100- and 200-day simple moving averages (SMAs) advocate a more than three-month decline, while the calmer downward slope of the 50-day SMA reflects recent efforts by buyers to counter the negative picture.

The red Tenkan-sen-line indicates the latest increase in positive forces, while the blue Kijun-sen-line has yet to show that downward pressures have fully diminished. The short-term oscillators suggest a bullish momentum is growing. The MACD, which continues to climb north of its red trigger line, has pushed past the zero threshold as the RSI goes to the 70-year overbought level. Moreover, the positively charged stochastic oscillator implies additional gains in the pair.

As mentioned at the beginning of the article, initial upper constraints could cross from the ground of the cloud around the 0.6810 barrier, which is overlapped by the diagonal resistance drawn from the 0.7216 high. If the three-week climb of the 0.6528 trough pushes higher into the cloud, the 0.6855-0.6910 resilience resistance limit could try to hinder further progress to challenge the descending 200-day SMA at 0.6945. That said, a successful jump beyond the 200-day SMA may delight buyers targeting the 0.7052-0.7100 next resistance obstacle.

Alternatively, if gains are limited by the cloud and the 0.6810 barrier, support could start between the 50-period SMA at 0.6727 and the 0.6700 hurdle. If a deeper retreat develops below the neighboring Ichimoku lines, the bears may then target the 0.6590 low before following the 0.6528 trough and adjacent 0.6487-0.6520 base, which extends into mid-July 2020.

In short, NZDUSD’s bearish bias is controversial by buyers who have managed, in the last three weeks, to pilot the Ichimoku cloud. The bulls could significantly revive upward momentum by climbing north of the cloud, although failing to do so may prolong the dominance of bearish pressures.

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