Technical Analysis – NZDUSD bulls may take a breather in short-term

Christina Parthenidou, XM Investment Research Desk

NZDUSD pierced the 0.6700 whole number before inching down on Tuesday, stretching its upward pattern to an almost 8-month high.

With the RSI having topped twice just below its 70 overbought mark, and the Stochastics shifting south from their 80 level, weakness is expected to persist in the short-term.

If that is the case, the area around the 20-day simple moving average (SMA) at 0.6580 could immediately attract attention given its resilience to downside and upside pressures in the past. A break below that zone could bring another key barrier at 0.6480 into view, while lower, a drop below 0.6380 could trigger a more aggressive sell-off, violating the uptrend at the same time.

Should the bulls regain strength, the price may head for the December high of 0.6754, a break of which could boost it towards the 0.6912-0.6970 resistance zone. Such a move would also upgrade the neutral outlook in the bigger picture to a positive one.

In brief, NZDUSD is expected to hold a positive-to-neutral bias in the short-term. A close below 0.6580 could give the lead to the bears.