GBP/NZD traded higher on Friday after it hit support at 1.9370 on Thursday. The advance brought the rate above yesterday’s high of 1.9460, thereby confirming a forthcoming higher high. The pair has been trading above an upside support line since Nov. 8, while since Wednesday, the trend accelerated. Thus, with all that in mind, we would consider the short-term picture to be positive.
In our view, the break above 1.9460 may have opened the path towards the high of Oct. 13, at 1.9660, or the high of Oct. 11, at 1.9705. The bulls may decide to take a break after testing one of those zones, thereby allowing a lower correction, perhaps to test the 1.9440 zone as a support this time. The bulls may recharge from there and possibly push the battle back up, even above the 1.9705 barrier. The next zone to consider as resistance may be at 1.9795, marked by the high of Aug. 25.
Shifting attention to our short-term oscillators, we see that the RSI moved back above 70, while the MACD lies above both its zero and trigger lines, pointing up as well. Both indicators detect high upside speed and support the notion for an uptrend continuation.
On the downside, we would like to see a drop below 1.9125 before we start examining whether the bears have stolen the bulls’ swords. The rate will already be well below the upside support line drawn from the low of Nov. 8, and thus, we may see it falling towards the low of Nov. 15, at 1.8975. If the sellers are unwilling to stop there, we could see them aiming for the low of Nov. 8, at 1.8860.