The NZD/USD currency pair is currently testing the upper boundary of a descending channel, positioned around the 0.5920 level. For the bullish trend to gain traction, a breakout above this level is essential, particularly if accompanied by a rise in the 14-day Relative Strength Index (RSI) above the neutral threshold of 50.
Recently recovering from losses, NZD/USD is trading near 0.5910 as trading resumes in the Asian session. Analysis of the daily chart reveals a potential shift in momentum, transitioning from bearish to bullish. The pair has notably surpassed the descending wedge pattern, while a subsequent descending channel formation indicates that additional upward movement could reinforce the bullish outlook.
Furthermore, the NZD/USD pair has risen above both the nine-day and 14-day Exponential Moving Averages (EMAs), signaling a strengthening of short-term price momentum. However, as the RSI remains below 50, the prevailing bearish sentiment continues to pose challenges. A sustained move above the 50 level in the RSI would be a critical indicator of an evolving bullish sentiment.
On the upside, if NZD/USD successfully breaks above the 0.5920 level, it could advance towards the psychological resistance at 0.6000, with minor resistance levels identified at 0.6038. Conversely, immediate support is found at the nine-day EMA at 0.5883 and the 14-day EMA at 0.5892. Should the pair fall below these support levels, it may face downward pressure. The next significant support level to watch is 0.5850, with a more considerable decline potentially leading to the two-year low of 0.5772 last seen in November 2023.
