The NZD/USD pair displayed a strong bullish momentum at the end of the week, with a rally to around 0.6050, representing an increase of 0.80%. The overall trend, however, remains in favor of the sellers, highlighting the need for further bullish validation. A crucial factor in this validation is crossing the 100-day Simple Moving Average (SMA), which the pair failed to achieve during Friday’s session. This failure indicates that the bearish trend may still be intact unless the buyers manage to regain control and push the pair above the 100-day SMA.
Looking at the daily chart, the Relative Strength Index (RSI) suggests a shift towards a stronger bullish trend. With an RSI of 56 in positive territory, there is a consistent increase in momentum favoring the buyers. This positive momentum has been building since early April when the RSI was below 50, indicating a significant turnaround in market sentiment. However, the challenge remains to breach the 100-day SMA, which serves as a critical resistance level for the pair.
On the hourly chart, a similar narrative unfolds with the RSI measuring 62 but showing signs of flattening after reaching overbought conditions earlier in the session. The Moving Average Convergence Divergence (MACD) histogram also signals a potential deceleration in the bullish momentum with consistent red bars. These indicators suggest that although bullish momentum is still present, it may be losing steam, requiring buyers to step up their efforts to maintain control.
The overall market trend confirms significant downside pressure on the NZD/USD pair as it trades below the 100 and 200-day SMA. This challenges short-term buyers and underscores the importance of breaching the 100-day SMA to turn the outlook bullish. The rejection around the 100-day SMA at the 0.6100 level during Friday’s session indicates that buyers need more traction to overcome this key resistance level. Despite these challenges, the break above the 20-day SMA provides some optimism for short-term outlook, suggesting a potential shift in market dynamics.
In conclusion, the NZD/USD pair is experiencing a tug of war between bullish and bearish forces, with the former gaining momentum but still facing resistance at key levels such as the 100-day SMA. Further validation of the bullish trend is required for buyers to gain control and potentially shift the overall market sentiment in their favor. Monitoring key technical indicators such as the RSI and MACD will provide insights into the evolving market dynamics and help traders navigate the fluctuations in the NZD/USD pair.
