Technical Sentiment: Bullish
Key Takeaways
- NZD/USD bounced from 0.8514;
- 0.8636 pivot breached towards upside;
- 0.8700 is the target.
NZD/USD failed to provide a Daily Lower Low when it bounced perfectly off the 0.8514 support and the 50-Day Moving Average. The pair has entered bullish territory once it moved above the 200 Simple Moving Average on the 4H chart and on the break above the 0.8636 pivot zone. If NFP disappoints, NZD/USD will continue its rally towards 0.8700 and above. Otherwise, another test of the support will be in play next.
Technical Analysis
NZD/USD invalidated the bearish lower low – lower high configuration from April when it broke above the 200 Simple Moving Average on 4H and above April 24th High. The only immediate hurdle ahead of the 0.8700 pivot zone is the 61.8% Fibonacci level from 0.8745 to 0.8514. The 200 Simple Moving Average on the 4H timeframe and the round number of 0.8600 should continue to provide support for the upswing, otherwise the bullish scenario will be invalidated.
A Fibonacci rejection from 0.8656 suggests the bullish correction on April’s downtrend is complete. For this scenario to be valid we’ll have to see NFP change of 216K or above and U.S. Unemployment rate drop to 6.6%. NZD/USD will then target 0.8600 and below. On the Daily chart, the current high would mark the first lower high, increases the chances of a breach below 0.8514 next time it will be tested.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
