NZD/USD’s ascent seems to be unstoppable with it now having overcome the June high at .8795. The area seen between this level and the . 8845 2011 peak is thus being tested and will be key for the medium term trend. As long as the .8845 high has not been bettered on a weekly closing basis we will retain our view that another top will be formed in the coming weeks. The rising wedge and negative divergence on the daily RSI continue to warn of a possible sharp reversal lower.
Should a weekly close above .8845 be made, though, we will have to allow for the 1976 low and psychological level around the .9000 mark to be reached. Other potential upside targets are the April 1980 low at .9260 and the 50% retracement of the 1973 to 2000 descent at .9400. We believe that a brief rise above .8845 will be seen in the days to come but that the currency pair will then stall. While it trades above the current July low at .8713 it stays bullish.
CB