The NZD/USD pair has recently made an upward move, recovering from losses and trading around 0.5990 in early European trading on Thursday. This price action has caught the attention of market watchers as it pushes through the critical 14-day Exponential Moving Average (EMA) near the 0.6000 level, signaling a potential shift in momentum. However, while this break suggests the possibility of bullish movement, key technical indicators still hint at a cautious outlook.
Technical Breakdown: Weakened Bearish Bias
Despite the recent breakout above the descending channel, the 14-day Relative Strength Index (RSI) remains below the 50 level, which continues to suggest a bearish bias for NZD/USD in the near term. A sustained reading below 50 indicates that sellers still have the upper hand, although the market’s recent movements hint at a weakening of this downward momentum. The critical level to watch is the 50 RSI mark; a move above this would indicate growing upward momentum and possibly shift the balance in favor of the bulls.
Adding to the cautious view, the nine-day EMA continues to lag behind the 14-day EMA, suggesting that the short-term momentum is not fully supportive of a sustained rally. For the pair to break decisively into bullish territory, it needs to clear the 0.6000 resistance level, which is currently testing the 14-day EMA.
Immediate Support and Resistance Levels
On the downside, if NZD/USD fails to maintain its bullish stance, immediate support is located at the upper boundary of the descending channel, aligned with the nine-day EMA at 0.5984. A drop below this level could suggest a re-entry into the channel, reinforcing the bearish bias. In such a case, the pair could revisit the lower boundary near the 0.5900 psychological level.
Should NZD/USD manage to break above the 0.6000 level, the next area of interest lies around the 0.6100 psychological barrier. A successful move above this level could trigger further bullish momentum, potentially targeting higher levels.
Also read : NZD/USD Forecast- UOB Group Reveals Key Levels To Watch As NZD Trades Within 0.5940-0.6040 Range
Outlook: Neutral to Slightly Bullish
In conclusion, while NZD/USD has shown signs of breaking out from its recent downtrend, the pair’s technical indicators suggest caution. A decisive move above the 0.6000 level could pave the way for further gains, but the prevailing bearish pressure indicated by the RSI and moving averages means traders should watch for confirmation before fully embracing a bullish trend. For now, the outlook remains neutral to slightly bullish, with traders awaiting a clearer direction in the coming sessions.
