NZDUSD is finally edging higher today following four consecutive red candles and after registering a new 2023 low. It appears to be the bulls’ first serious attempt to put a stop to the bearish breakout from the rectangle that has been in place since February 2023. They could potentially threaten the aggressive July 14, 2023 downward sloping trendline that NZDUSD has actually been religiously respecting.
The momentum indicators continue to reflect the recent downleg from the mid-July NZDUSD highs. However, there are some early signs that a reversal could be on the cards. More specifically, the RSI is edging higher after recording its lower print since the September 2022 sell-off. Similarly, the stochastic oscillator is stuck at the bottom of its oversold territory and is apparently preparing for a move higher. Should the Average Directional Movement Index (ADX) move back to a range-trading signal, then the market would probably be ripe for a proper rebound.
Should the bears ignore today’s green candle, they would try to record a new 2023 low and finally break the May 15, 2022 low at 0.5920. The door would then be open for both the 23.6% Fibonacci retracement of the April 5, 2022 – October 13, 2022 downtrend at 0.5870 and the October 6, 2022 high at 0.5813.
On the flip side, the bulls are keen on building upon today’s move with first resistance coming at the July 14, 2023 trendline. Higher, the busy 0.6060-0.6092 range, defined by the 38.2% Fibonacci retracement and the July 14, 2022 low respectively, is critical from a short-term momentum perspective and it is the final step before pushing NZDUSD back inside the aforementioned rectangle.
To conclude, NZDUSD bulls are trying to react to the continued bearish pressure. However, the bears appear to be relaxed for as long as the July 14, 2023 trendline holds.
