The RBNZ is widely expected to hike interest rates again this week, so I’m looking at this potential bullish play on NZD/USD.
Can the pair sustain its climb after breaking above this reversal pattern’s neckline?
Before you check out the setup, make sure you know all of last week’s major market movers as well as this week’s potential market catalysts!
NZD/USD 1-hour Forex Chart by TV
Kiwi bulls seem excited to price in their expectations for an RBNZ hike, as NZD/USD already busted through its double bottom neckline before the actual event.
This chart pattern spans a little over 50 pips, so the pair might be in for a rally of at least the same size.
However, the .6300 major psychological barrier has proven to be a tough ceiling to break through, leading price to retreat to nearby support zones.
The Fibonacci retracement tool shows levels where buyers might be waiting to hop in and possibly sustain the uptrend.
The 38.2% level seems to have drawn some buying interest already, as a reversal candlestick formed right on this support area.
If the pair is up for a larger correction, I’ve got my eyes on the 50% Fib level, which is close to the .6250 minor psychological mark and former neckline resistance.
After all, technical indicators are still reflecting the presence of bearish vibes, so the pullback might continue until a bullish moving average crossover happens or Stochastic pulls up from the oversold region.
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