NZDUSD is recording a green candle today as the bulls are trying to halt the bearish breakout from the rectangle that has been in place since February 2023. This is actually the fourth breakout attempt since early June 2023, but similar to the previous ones, it seems to lack the necessary strength for a sizeable downleg. At least, the bears have managed to cancel the recent series of higher highs and higher lows that was developing since the May 31 local trough.
With the Average Directional Movement Index (ADX) mostly in holiday mood and pointing to a trendless market, the focus turns once again on the RSI and the stochastic oscillator. The former is moving sideways, a tad below its 50-midpoint and thus confirming the presence of bearish pressure. More importantly, the stochastic is preparing to break above its moving average and then gradually move above its oversold territory. This reaction would be seen as a strong bullish signal, especially if the ADX agrees and signals a bullish trend in NZDUSD.
Should the bears still feel confident, they would first try to overcome the support set by the busy 0.6060-0.6092 range that is defined by the 38.2% Fibonacci retracement of the April 5, 2022 – October 13, 2022 downtrend and the July 14, 2022 low respectively. They would then have the chance of recording a new 2023 low by overcoming the previous one at 0.5984, before setting their eyes on the May 15, 2022 low at 0.5920.
On the flip side, the bulls are patiently waiting to retake the market reins, and push NZDUSD above the 0.6060-0.6092 area and back inside the aforementioned rectangle. They could then have a go at leading NZDUSD even higher, towards the 0.6167-0.6231 range. This is populated by the 50-, 100- and 200-day SMAs and could prove tougher to crack.
To conclude, NZDUSD bears are trying to defend the current breakout, but the bulls appear ready to continue their counterattack, especially if they get the decisive signal from the stochastic oscillator.