NZD/USD Price Analysis: Needs a breakout of inverted H&S for a fresh upside
- A bullish reversal seems likely on an Inverted H&S formation on the daily chart.
- The 20-and 50-EMAs have resumed their upside journey which adds to the upside filters.
- A shift into the bullish range of 60.00-80.00 by the RSI (14) will strengthen the New Zealand Dollar.
The NZD/USD pair is facing hurdles in surpassing the immediate resistance of 0.6400 in the Tokyo session. The Kiwi asset is expected to extend its rally to near the critical resistance of 0.615 amid optimism in market sentiment.
An improvement in the risk appetite of the market participants is further strengthening the S&P500 futures despite a four-day winning streak. Meanwhile, the US Dollar Index (DXY) is on the verge of testing a seven-month low around 101.60.
On a daily scale, NZD/USD has formed an Inverted Head and Shoulder chart pattern that indicates a bullish reversal, which is expected to strengthen the New Zealand Dollar ahead. The 20-and 50-period Exponential Moving Averages (EMAs) at 0.6352 and 0.6342 respectively have resumed their upside journey, which adds to the upside filters.
The Relative Strength Index (RSI) (14) is aiming to shift into the bullish range of 60.00-80.00, which indicates that the upside momentum is active.
For an upside move, the kiwi asset needs to surpass the previous week’s high at 0.6418, which will drive the major towards the psychological resistance at 0.6500 followed by June 6 high at 0.6538.
On the contrary, a slippage below January 12 low at 0.6314 will provide strength to the US Dollar, which will drag the asst toward December 22 low at 0.630. A slippage below the latter will expose the asst for more downside towards January 6 low at 0.6190.
NZD/USD daily chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
