NZD/USD technical analysis: Corrective bounce elusive despite bullish divergence of key indicator
- NZD/USD's daily chart indicators are reporting early signs of a bullish reversal.
- Trend reversal would be confirmed above Monday's high.
NZD/USD remains on the defensive in Asia amid rising signs of seller exhaustion on the technical charts.
To start with, the moving average convergence divergence histogram has produced higher lows in the last 20 days, contradicting the lower lows on NZD/USD. That bullish divergence indicates selling momentum has slowed and the downtrend is more susceptible to a reversal.
Further, the 14-day relative strength index (RSI) is reporting oversold conditions with a below-30 print.
So far, however, a corrective bounce has remained elusive. As of writing, the pair is trading in the red at 0.6355, having dropped 0.44% on Tuesday.
A break above 0.6403 - the high of Monday's long-tailed Doji - is needed to validate the bullish developments on key indicators and open the doors to 0.6482 (May 23 low).
On the downside, acceptance under Monday's low of 0.6341 would only bolster the bearish setup.
Daily chart
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Trend: Bullish above 0.6403
Pivot points
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
