NZD/USD Price Analysis: Poised to test 0.6580-85 area, June swing highs

• NZD/USD gains traction for the fourth consecutive session on Friday.
• Thursday’s breakthrough a descending channel favours bullish traders.
• The emergence of some dip-buying further adds credence to the outlook.

The NZD/USD pair traded with a positive bias for the fourth consecutive session and was last seen trading near three-week tops, around the 0.6530 region.

The overnight sustained move beyond the key 0.6500 psychological mark – representing the top end of a short-term descending channel – supports prospects for a further appreciating move. The mentioned channel constituted to the formation of a bullish continuation flag chart pattern. The emergence of some dip-buying on Friday, near the resistance breakpoint, turned support, further add credence to the constructive set-up. The positive outlook is further reinforced bullish technical indicators on the daily chart, which are still far from being in the overbought zone.

However, RSI (14) on the 4-hourly chart is on the verge of moving beyond the 70 level, representing slightly overstretched conditions. This, in turn, warrants some caution before placing aggressive bullish bets amid relatively thin liquidity and concerns about surging COVID-19 cases. Nevertheless, the technical set-up remains firmly in favour of bullish traders. Hence, a move back towards June monthly swing highs, around the 0.6580-85 supply zone, remains a distinct possibility.

NZD/USD 4-hourly chart

Technical levels to watch