- NZUSD hovers above a key support area
- Aggressive downward move from late December 2023 peak
- Momentum indicators are mostly mixed at this juncture
NZDUSD is in the green today, but it continues to range trade. The 0.6036-0.6092 area appears to have put a temporary stop at the correction that has been in place since the December 28, 2023 high. Market participants could also be in waiting mode for some key market events coming up over the next 10 days, especially next week’s Fed decision.
The momentum indicators remain mostly mixed. More specifically, the RSI is trading a tad below its midpoint. Interestingly, the Average Directional Movement Index (ADX) is moving higher, but its D- subcomponent remains stuck below the 25 midpoint. More importantly, the stochastic oscillator is trying to break above both its moving average and oversold area. Should it succeed, it would send a strong signal for the direction of NZDUSD.
If the bulls decide to retake the market reins, they could try to lead NZDUSD towards the 50-day simple moving average (SMA) at 0.6165. Then, the October 1, 2019 low at 0.6198 looks a plausible target provided of course the bulls manage to overcome the resistance set by the December 28, 2023 descending trendline. Even higher, the bulls could have a go at the 50% Fibonacci retracement of the April 5, 2022 – October 13, 2022 downtrend at 0.6272.
On the flip side, the bears are keen to keep the current correction alive. They could try to break below the 0.6036-0.6092 area, which is populated by the 38.2% Fibonacci retracement, the July 14, 2022 low and the 100- and 200-day SMAs. The path then appears to be unhindered until the May 15, 2022 low at 0.5920.
To sum up, NZDUSD trades sideways with the bears hoping that the stochastic oscillator does not send a bullish signal soon.
