HomeContributorsTechnical AnalysisNZDUSD Bulls Hold the Upper Hand after the False Bearish Breakout

NZDUSD Bulls Hold the Upper Hand after the False Bearish Breakout

NZDUSD has returned inside the rectangle that has been dictating the price action since February 2023 as the recent bearish breakout proved to be false. This move has clearly dented the NZD bears’ confidence, but they have to react quickly in order to contain the bullish pressure.

NZDUSD is currently hovering around the 200-day simple moving average (SMA) as the momentum indicators are tentatively supporting the current upleg. The Average Directional Movement Index (ADX) is edging higher, signaling a decent bullish trend, and the RSI is hovering just above its 50-midpoint. More interestingly, the stochastic oscillator is edging higher, opening a sizeable gap from its moving average, and hence pointing to the continuation of the current rally.

If the NZD bulls try to further capitalize on the failed bearish breakout, they have to break the busy 0.6147-0.6216 area that is defined by the 50-, 100- and 200-day SMAs. Higher, the 50% Fibonacci retracement of the April 5, 2022 – October 13, 2022 downtrend at 0.6272 could prove tougher to crack than anticipated.

On the other hand, if the NZD bears decide to negate the current bullish move, they have to push the pair below the 200-day SMA. They would then have to recapture the 0.6060-0.6092 range populated by the 38.2% Fibonacci retracement and the July 14, 2022 low respectively. Another bearish breakout looks premature but if the NZD bears appear confident, they would set their eyes on the May 15, 2022 low at 0.5920.

To sum up, NZDUSD bulls have the chance for a strong rally following the false bearish breakout, as the bears look for the appropriate area to set up their defence.

XM is a fully regulated next-generation financial services provider of online trading on currency exchange, commodities, equity indices, precious metals and energies, with services to clients from over 196 countries worldwide. Founded in 2009 by market experts with extensive knowledge of the global forex and capital markets and with the aim to ensure fair and reliable trading conditions for every client, XM has reached international recognition by virtue of its unbeatable execution of orders, spreads as low as zero pips on over 50 currency pairs, gold and silver, flexible leverage up to 888:1, and personalized customer engagement to foster clients’ success.

Featured Analysis

Learn Forex Trading