The NZD/USD climbed higher despite a 50 basis point rate cut from the Reserve Bank of New Zealand, driven by a clear “buy the fact” reaction from traders. This rally was supported by technical factors, with the pair breaking above its 200-hour moving average at 0.5863. This level had previously capped gains on Monday and Tuesday, making the breakout significant. Following the initial move higher, the price corrected back toward the moving average, where buyers stepped in to provide support. This formed a base that gave buyers the confidence to push prices even higher.
The upward momentum initially stalled at the upper boundary of a swing area between 0.58919 and 0.5901. However, during the early U.S. session, renewed buying pressure drove the pair toward its next technical target, the falling 100-bar moving average on the 4-hour chart at 0.59048. Sellers have since slowed the rise at this level, reflecting some caution after the sharp move upward. The pair has gained 1.2% from yesterday’s close, marking the fourth-largest one-day gain this year.
For traders, the 100-bar moving average provides a clear level to define and manage risk. A break above this resistance could open the door for further gains, while a move back below the broken 38.2% retracement of the November range at 0.5889 would likely give sellers renewed confidence and shift momentum back in their favor.
This article was written by Greg Michalowski at www.forexlive.com.
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