The NZDUSD is stretching to the upside, reaching its highest level since September 23. Buyers have been rebuilding the technical picture after the pair’s decline from the August 21 high at 0.59868 to last Wednesday’s low at 0.55645.
That recovery has developed one step at a time. First, the price broke above a downward-sloping trendline. Then it moved above its 100- and 200-hour moving averages and started to put some distance between the price and those technical barometers. A subsequent break above the swing area between 0.56256 and 0.56333 gave buyers another reason to push higher.
Today, the pair cleared another swing area between 0.5673 and 0.5686. The encouraging part for buyers was what happened next: the price rotated back toward the top of that area, found support, and turned higher again. That successful retest helped propel the pair to a session high near 0.5704.
The buyers are making a play. But there is another important hurdle ahead.
What comes next?
The next key upside target is the 38.2% retracement of the decline from the August 21 high at 0.57258.
Why does that level matter? After a strong trend move lower, I look at the 38.2% retracement as a minimum benchmark for judging whether buyers are making a more meaningful challenge to that trend.
The recovery has improved the shorter-term bias, but a move above 0.57258—and the ability to stay above it—would strengthen the case that buyers are taking back more control. If the price stalls below that retracement, the broader move can still be viewed as a correction within the preceding downtrend.
The distinction matters. A rally gives buyers an opportunity. Getting above key resistance and staying above it provides stronger technical confirmation.
Where is the risk for buyers?
On the downside, the low of the broken swing area near 0.56736 is now an important support level. Buyers would want to see that level hold to keep the breakout intact.
A more conservative risk level comes against the rising 100-hour moving average at 0.56637. That moving average is moving closer to the swing-area support. A break below both would weaken the bullish technical picture and put more pressure on buyers.
For now, the progression favors the buyers: break resistance, hold it on a retest, and extend toward the next target. Their job is to keep that sequence going.
In the video above, I walk through those technical steps and explain how I use them to define bias, risk, and targets—so you can understand the mindset behind the trade and the levels that would change the view.
This article was written by Greg Michalowski at investinglive.com.