- The NZD / USD forecasts a strong recovery after the three-week lows on Monday.
- The 0.6040 support transformed into resistance could limit future gains.
The NZD / USD continued to gain strength at the start of the North American session and refreshed daily highs in the past hour. The pair have now reversed the negative movement from the previous session to three-week lows, with the bulls now looking to continue beyond the key psychological mark of 0.60.
The level mentioned marks a 50 day SMA and is followed by a short term uptrend channel support break point around the region of 0.6040. Meanwhile, the bearish oscillators on the 4 hour / day charts indicate the possible emergence of new sales near the support area that has become mentioned resistance.
Therefore, it will be prudent to wait for solid follow-up purchases before confirming that the recent decline is already over and positioning for any short-term appreciation movement. The pair could then aim to retest the supply area of 0.6150 en route to the SMA barrier at 100 days, around the region of 0.6175.
On the other hand, the 0.5985-80 zone now appears to protect the immediate downturn, which, if broken, will add credibility to the negative outlook and further accelerate the slide towards the 0.5920-10 region. A convincing break will pave the way for another short-term fall to the 0.5860-50 area.