NZD/USD stuck in a rectangle pattern [Video]

NZDUSD claims 200-day SMA and descending trendline.
But the pair fails to rally, extending sideways move.
Oscillators improve but remain in negative territories.

Stefanos Oikonomidis XM

NZDUSD entered a downtrend after getting rejected at the 78.6% Fibonacci retracement of the 0.6536-0.5772 downleg in December. However, the pair has adopted a rangebound pattern around the 200-day simple moving average (SMA) since mid-January, while the latest jump above it has failed to trigger a strong advance.

Given that both the RSI and MACD are within their negative zones, the price might drop again below the 200-day SMA and challenge the 38.2% Fibo of 0.6064. Diving beneath that floor, the pair could descend towards the recent two-month bottom of 0.6037. A violation of that region could set the stage for the 23.6% Fibo of 0.5952.

On the flipside, should the recovery resume, immediate resistance could be found at the 50.0% Fibo of 0.6154. Further advances could then cease around the 61.8% Fibo of 0.6244. Piercing through that hurdle, the price might test the 78.6% Fibo of 0.6373, a region that capped the pair's advance in December.

Overall, despite the break above both the 200-day SMA and the downward sloping trendline, NZDUSD continues to hover within its rangebound structure. Hence, in the case that the rebound resumes, the focus will shift on the 50.0% Fibo of 0.6154.

Author

Stefanos Oikonomidis

Stefanos joined XM as a Junior Investment Analyst in September 2021. He conducts daily market research on the currency, commodity and equity markets, from a fundamental and a technical perspective.

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