NZD/USD Clears 2020 High To Push RSI Towards Overbought Territory

NZD/USD RATE DAILY CHART

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Image of NZD/USD rate daily chart

Source: Trading View

  • Keep in mind, NZD/USD cleared the February high (0.6503) in June as the Relative Strength Index (RSI) broke above 70 for the first time in 2020, with the exchange rate taking out the January high (0.6733) in September following the close above the Fibonacci overlap around 0.6710 (61.8% expansion) to 0.6740 (23.6% expansion).
  • However, lack of momentum to close above the 0.6790 (50% expansion) region pushed NZD/USD below the Fibonacci overlap around 0.6600 (38.2% expansion) to 0.6630 (78.6% expansion), with the RSI slipping to its lowest level since April during the same period.
  • NZD/USD appeared to be on track to test the August low (0.6489) as the RSI established a downward trend in September, but the decline from the September high (0.6798)turned out to be an exhaustion in the bullish trend rather than a change in NZD/USD behavior as the 0.6490 (50% expansion) to 0.6520 (100% expansion) region provided support.
  • The RSI highlighted a similar dynamic as it reverses course ahead of oversold territory to break out of the bearish formation from September, with the oscillator establishing an upward trend in October.
  • Lack of momentum to test the August low (0.6489) pushed NZD/USD back above the 0.6600 (38.2% expansion) to 0.6630 (78.6% expansion) region, with the exchange rate clearing the September high (0.6798) in November, which pushed the RSI into overbought territory for the first time since June.
  • NZD/USD also cleared the June 2018 high (0.7060) as it climbed to a fresh yearly highs in December, with the exchange rate taking out the 2020 high (0.7241) during the first week of January to come up against the 0.7260 (78.6% expansion) region.
  • Looming developments in the RSI may show the bullish momentum gathering pace as the oscillator flirts with overbought territory, but still need a close above the 0.7260 (78.6% expansion) region to bring the Fibonacci overlap around 0.7330 (38.2% retracement) to 0.7350 (23.6% expansion) on the radar.
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