NZDUSD is currently testing the bottom of the ascending trend channel on its 1-hour time frame, still deciding whether to go for a bounce or a break. 

Stochastic is indicating oversold conditions with a bullish divergence, suggesting that a bounce might take place. MACD is also in the oversold area and hinting at a possible rally. 

The moving averages aren’t offering good clues at the moment since the indicators are moving sideways. The 100 SMA is still moving above the 200 SMA, which suggests that the uptrend could stay intact.

A bounce from the current levels might take NZDUSD up to the top of the channel near the .8050 minor psychological level. A weaker rally might last just until the mid-channel area of interest at .7950.

On the other hand, a downside break of support might lead to a longer-term downtrend and perhaps a test of the previous lows near the .7700 handle. After all, the latest CPI release from New Zealand was weaker than expected at 0.3% for the third quarter versus the projected 0.5% increase.

By Kate Curtis from Trader’s Way