NZD/USD: Short covering reaches key bear trendline

FXStreet (Bali) - NZD/USD short covering accelerated in Wednesday, stretching its recovery for a fourth day with the market still keen to trip as many stops as possible following the failed 0.7670/0.77 breakout.

While the bull run has come fast and furious, a characterization of a crowded NZD short market aiming to get as many traders on the wrong-foot as possible, it is worth being reminded that the big picture is still firmly bearish, with prices currently being capped by a descending trendline connecting the latest 2 day peaks from Oct 22 and 29.

Technically, Jim Langlands, Founder at FXCharts, notes: "On the topside a break above the 0.7909 session high would head towards 0.7940 where a couple of Fibo levels are lining up and should provide decent resistance. A break to the downside would see bids at 0.7840 and 0.7820, both minor, ahead of another look at 0.7800. I doubt that we head back below here today but the longer term bearish outlook remains unchanged."