NZD/USD Technical Analysis: RSI offers overbought signal for first since November 2018

• NZD/USD has hit the highest level since Oct. 1.
• The daily RSI is reporting overbought readings for the first time in over 12 months.  

NZD/USD has hit four-month highs  and is looking overbought for the first time since November 2018, according to key indicators.  

The pair is currently trading just above the 200-day average of 0.6541, having hit a high of 0.6562 an hour ago. That was the highest level since Aug. 6. The Kiwi is currently reporting a 5.5 percent gain on the low of 0.6204 registered on Oct. 1, but it still down 2.3% on a year-to-date basis.  

The higher lows and higher highs pattern on the daily chart indicate the path of least resistance is to the higher side. However, the 14-day relative strength index, a widely used technical tool, is reporting overbought conditions with an above-70 print for the first time in 13 months.  

The pair, therefore, could consolidate or witness a minor pullback in the short-term before potential rally toward 0.67. That argument would gain credence if signs of bullish exhaustion emerge on the daily chart in the form of a candle with long upper wick, Doji, bearish outside day, etc.  

Note that an overbought reading represents extreme short-term bullish move and does not imply a bearish reversal.  

A bearish reversal would be confirmed if and when the pair violates the higher lows set up with a move below 0.6394.

Daily chart

Trend: Overbought

Technical levels