- NZDUSD continues to hover around the 0.5920 level
- Last week’s key events did not result in a new trend in NZDUSD
- The momentum indicators have taken a back seat at this stage
NZDUSD is trading lower, testing the support set by the May 15, 2022 low of 0.5920. The bears have managed to stop the recent series of six consecutive green candles, but they have failed, up to now, to register a significant sell-off.
Similarly, the momentum indicators are trying to find their footing. The Average Directional Movement Index (ADX) points to a trendless market, and the RSI continues to hover around its 50-midpoint. Additionally, the stochastic oscillator’s advance has stopped a tad above its midpoint. It is currently trading sideways, revealing the market participants’ current appetite for new positions in NZDUSD.
Interestingly, an inverse head-and-shoulders pattern could be on its way, provided that we get the formation of the right leg of this structure. Should this take place, it would be another factor to take into consideration going forward.
Should the bears feel confident, they would try to finally break the May 15, 2022 low at 0.5920 and have another go at the 23.6% Fibonacci retracement of the April 5, 2022 – October 13, 2022 downtrend at 0.5870. Their first attempt to overcome this key level failed on September 5. If successful this time around, they could then test the support set by the October 6, 2022 high at 0.5813.
On the flip side, the bulls are keen on defending the 0.5920 level and gradually stage a move lower towards the 50-day simple moving average (SMA) at 0.5996. They could then have a go at breaking the busy 0.6060-0.6092 range, defined by the 38.2% Fibonacci retracement, the July 14, 2022 low and the 100-day SMA. This is the final step before pushing NZDUSD back inside the rectangle that has been in place since February 2023.
To conclude, the 0.5920 level appears to be key for the next leg in NZDUSD. The bears are trying to overcome this area, but they seem to lack the momentum that led NZDUSD aggressively lower from the July 14, 2023 high.
