EUR/NZD traded higher today, but hit resistance near the 1.7347 level, which is fractionally below the peak of November 19th, and then it retreated somewhat. Overall, the pair is trading above a tentative upside support line drawn from the low of December 30th, while since February 19th, it has been respecting another shorter and steeper upside line. All this, combined with the fact that the rate is also trading above all three of our moving averages on the 4-hour chart, keeps the near-term outlook positive.
If the bulls decide to reload their guns and shoot for territories above 1.7347, we could see them setting as a first target the highs of November 8th and 12th, at around 1.7435. If they reach and breach that hurdle, we could then see them putting the 1.7515 zone on their radars. That area is defined as a resistance by the highs of October 28th and 30th.
Shifting attention to our short-term momentum studies though, we see decent chances for the current retreat to continue for a while more before the bulls decide to shoot again, perhaps for the rate to retest the aforementioned steep short-term upside line. The RSI has topped within its above-70 territory and could exit that zone soon, while the MACD, although above both its zero and trigger lines, shows signs of topping as well.
In order to start examining whether the bulls have dropped their weapons, and thereby allowed a deeper downside correction, we would like to see a decisive dip below 1.7165. The rate would already be below the steep upside line and may be driven towards the 1.7080 territory, near Tuesday’s low. Another dip, below 1.7080, could carry more bearish implications perhaps paving the way for the low of February 21st or the inside swing high of February 19th, at around 1.7005 and 1.6945 respectively.
