- NZD/USD built on the overnight breakthrough a short-term descending trend-channel.
- The set-up favours bulls and supports prospects for a move beyond the 0.6700 mark.
- Slightly overbought conditions on hourly charts warrant some caution for bullish traders.
The NZD/USD pair built on its recent bounce from sub-0.6500 levels, or over one-month lows set on August 20 and gained traction for the third consecutive session on Thursday.
The overnight breakthrough a multi-week-old descending trend-channel was seen as a key trigger for bullish traders. The mentioned channel constituted the formation of a bullish flag on short-term charts and a sustained strength beyond might have already set the stage for additional gains.
Bullish technical indicators on the daily charts further reinforce the near-term constructive outlook. However, oscillators on hourly charts have moved on the verge of moving into the overbought territory and warrant some caution for bullish traders ahead of the Fed Chair Jerome Powell’s speech.
This makes it prudent to wait for some intraday consolidation, or a modest pullback to the mentioned trend-channel resistance breakpoint before positioning for any further appreciating move. That said, the pair seems poised to reclaim the 0.6700 mark and retest YTD tops, near the 0.6715 region.
On the flip side, any pullback will be seen as a buying opportunity and remain limited near the 0.6600 mark. Some follow-through selling might prompt some technical selling and accelerate the slide further towards an important horizontal support near the 0.6550 area.
NZD/USD 4-hourly chart
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Technical levels to watch
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