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NZD/USD Rallies Sharply Towards Key Resistance

The NZD/USD was choppy in most of August, but is now showing a bullish push. The 4H chart shows the pair bounce off of a new low on the year at 0.6466. IT has since pushed up above 0.67 by the Friday (8/21) session.

NZD/USD 4H Chart 8/21

(click to enlarge)

The 4H chart shows the pair now above the cluster of 200-, 100-, and 50-period SMAs and the RSI pop up above 70. This shows a market that has turned bullish at least in the short-term. However, the bullish outlook might need to be limited because the prevailing mode heading into August was bearish.

Now if the current rally is part of a consolidation, we need to consider a consolidation range with the July highs in 0.6738-0.6770 as a resistance area. The support would be the 0.6466-0.65 area. 

At this point we might want to respect the 0.6750 area as resistance, a decision we might want to make next week as the bullish action this week continues to push higher. 

NZD/USD Daily Chart 8/21
(click to enlarge)

The daily chart shows a bearish market. The short-term rally could indeed by part of a consolidation range. Some might see a double bottom, and rightly so at least for now. But, even if price breaks above 0.6770, I would suspect a false bullish breakout. I would wait for a pullback. If the pullback finds support around 0.8650, I would be more inclined to believe in further bullish correction, with the 0.70 handle in sight. However, a break below 0.86 would be a strong sign that the market is still bearish after the current period of consolidation/correction.