NZDUSD reached oversold levels according to the stochastic oscillator and reversed higher after it hit a new seven-week low at 0.6487. The RSI is also returning higher in the negative territory.
While the aforementioned technical indicators continue to pick up speed, mirroring the market’s upside retracement in the very short-term the 20- and 40-period simple moving averages (SMAs) are trying to tick higher increasing their distance above the price action.
In case the pair changes its short-term direction to the upside, the bulls will probably challenge the 23.6% Fibonacci retracement level of the down leg from 0.6715 to 0.6487 at 0.6540. A break higher could last until 0.6575, this being the 38.2% Fibonacci. Further up, the area around the 200-period SMA around the 50.0% Fibo of 0.6600 could be another potential obstacle for upward movements.
Alternatively, additional declines may drive the price towards the seven-week low of 0.6487. Beneath the latter, the 0.6440 support, taken from the bottom on July 1 could be another level in focus ahead of the 0.6383 barrier.
Turning to the bigger window, the pair switched to bearish mode after the rally off 0.6715, though a jump above the 61.8% Fibo may change this outlook.
