NZD/USD remained in the 0.7160/0.7195 area for three sessions prior to plunging down to the 200-hour SMA during the first half of Wednesday’s trading session. All this movement demonstrates the existence of a short-term descending channel.

A test of the long-term moving average was followed by a correction upwards, thus providing another confirmation of the bottom channel boundary.

This situation together with technical oscillators that are gradually recovering from the oversold area point to an upward momentum, possibly up to the 100– or 55-hour SMAs or the upper channel boundary in the 0.7160/75 area.

In case of a strong movement downwards, the weekly and monthly S1s near the 0.7095 mark are likely to halt further price decrease.