Market Analysis – January 7
NZDUSD remains in a prolonged bearish trend. Recently, the price crashed aggressively to the demand level of 0.56100 from 0.57740. This has led to exhaustion, which has been displayed by a fluctuation of price at the demand level since late December.
NZDUSD Key Levels
Demand levels: 0.56100, 0.55100, 0.50000
Supply Levels: 0.57740, 0.58840, 0.60700
NZDUSD Long-term Trend: Bearish
The Relative Strength Index (RSI) gave a strong, accurate signal before the start of the bearish trend. The RSI (relative Strenght Index) formed a divergence with a lower high at the overbought zone compared to a higher high in October. The cross of the Moving Average period 9 below 21 finally confirmed the reversal.
After crashing through many demand levels, the last displacement was wild. In a single day, the price dropped -2.41 percent to the demand level of 0.56100. The rapid price displacement created a fair value gap, which shows an area of inefficient market delivery.
NZDUSD Short-term Trend: Bearish
The price stiffness is more pronounced on the 4-hour chart. The Fair Value Gap (FVG) on the daily chart is also well pronounced on the lower timeframe. A pullback may fill up the (FVG) before the decline continues. The price may roll over without a pullback to the next demand level if the selling pressure remains heavy.
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