NZD/USD Daily Chart 7:35PM EST 11/25/2012


Recent developments: As we begin a new week, let’s take a look at the Kiwi’s recent developments. As seen in the daily chart, NZD/USD has been rally since the May low of 0.7454 until the high in September of 0.8350. This rally broke above the 200-day SMA and more importantly, a declining trendline resistance that extended back to 0.8840 the 2011-high made on August 1 last year.

Consolidation: Since failing to break through the 0.8350 high in September, NZD/USD has retreated, falling to 0.81, reaching down to 0.8050. The sideways price action since late September reflects consolidation, as does the fact that the RSI has since been stuck between 40 and 60. Relative to the rally since the May low of 0.8454, you can see that there has not even been a 38.2% retracement, so its been a relatively mild one.

Bullish bias: In fact, the consolidation has preserved technically bullish bias. 1) Price action tested the 200-day SMA and bounced stayed above. 2) The RSI held above 40, and therefore maintains the previously established bullish momentum. If the daily RSI pushes above 60, it would reflect bullish continuation momentum. If this bias remains, a push above 0.8350 should open up the 2012-high from of 0.8470, set in January this year.

Retracement Target: Currently, the 200-day SMA around 0.8050 should be considered consolidation. 0.7796 is the origin of a trendline since July. That could be a retracement target if the market pushes below 0.8050.