- NZD remains on the back foot against USD
- NZDUSD has finally broken below its one-year-long rectangle
- Momentum indicators acknowledge the current bearish move
NZDUSD is recording another red candle today and it is trading below the lower boundary of the one-year-old rectangle and the busy 0.6060-0.6092 area. It has actually registered a new 2024 low with the market now turning its focus to the critical Fed meeting, which could result in increased volatility in NZDUSD as made evident by the convergence of the 50- and 100-day simple moving averages (SMAs).
In the meantime, the momentum indicators are mostly on the bears’ side. More specifically, the RSI has dropped below its 50-midpoint and it is thus pointing to increasing bearish pressure. Similarly, the Average Directional Movement Index (ADX) is tentatively hovering above its 25-threshold and thus signalling the presence of a weak bearish trend in NZDUSD. More importantly, the stochastic oscillator has reached its oversold territory (OS) but maintains a good gap from its moving average.
If the bulls decide to retake the market reins, they could try to lead NZDUSD higher towards the 0.6060-0.6092 range, which is populated by the 38.2% Fibonacci retracement, the July 14, 2022 low and the 200-day simple moving average (SMA), and then back inside the aforementioned rectangle. Even higher, the 0.6120-0.6127 range defined by the 50- and 100-day SMAs appears to be a key resistance area.
On the flip side, the bears appear ready to take advantage of the current momentum and push NZDUSD lower. The 0.6000 level is probably the first key support level with the May 15, 2022 low at 0.5920 possibly being the next plausible target.
To sum up, NZDUSD bears have recorded a new 2024 low but market events could offer them the opportunity for an even stronger correction towards the November 2023 levels.
