NZDUSD is setting the table for a bullish start to December after refusing to close below its August trough on Tuesday despite its flash drop to a new yearly low of 0.6771.
Oversold conditions seem to have been met as both the RSI and Stochastics have bottomed near their 30 and 20 levels respectively and are currently clearly changing course to the upside. Besides, with the price being attached to the lower Bollinger band for the past three weeks, an upside reversal is looking reasonable in the short term.
Whether the bulls will take control, however, may depend on the nearby 0.6858 resistance level. The price could not overcome that bar yesterday, therefore any close above it is expected to produce another extension up to the restrictive red Tenkan-sen line at 0.6906. Beyond that, the bulls may attempt to breach the 0.7000 psychological mark and stretch towards the 50-day simple moving average (SMA) and the descending line seen at 0.7030, which resumed its role as resistance in mid-November.
In the case the pair retreats below yesterday’s low of 0.6771, the spotlight will fall again on the tentative supportive line at 0.6700. Should sellers persist, the next pivot point could be settled around the 0.6600 handle, last active in the second half of 2020.
Summarizing, NZDUSD is expected to deliver a positive start to December as its monthly decline is looking overdone. A close above 0.6858 could boost the current bullish momentum in the price.
