NZDUSD has experienced a significant movement as it recently gaps away from the formidable resistance zone situated at 0.6380. This resistance level has been proven to be a staunch barrier to any bullish momentum on three separate occasions since February, showcasing its significance in influencing the price action of the currency pair.
NZDUSD remains in a bearish trajectory, as evidenced by the Relative Strength Index (RSI), which showed an overbought condition just before the gap away from the resistance level. This overbought signal indicates that buyers were exhausted at that point, opening the door for a potential bearish continuation. As such, it is likely that the currency pair will continue its downward journey towards the fair value gap at 0.610 before potentially retracing back to the region of the gap.
The recent price action of NZDUSD highlights the role of Moving Averages (MA) in shaping trends. Prior to the gap away, the Moving Averages were supportive of the bullish motion, providing a clear path towards the resistance level. However, the subsequent gap below the Moving Averages now signifies a shift in market sentiment, signalling a more bearish outlook.
NZDUSD Short-term Trend: Bearish
Looking at the short-term trend in the 4-hour timeframe, a bearish market structure is evident, corroborating the long-term bearish bias. Nonetheless, there is a glimmer of hope for the bulls, as the Stochastic Oscillator is currently rising from the oversold region. This suggests a potential pullback in the bearish trend, allowing traders to reassess their positions.
However, caution is essential, as the pullback is expected to gain sufficient momentum to shoot below the support level at 0.6130. In conclusion, NZDUSD’s gap away from the resistance zone has reinforced the bearish trend, supported by various technical indicators and price levels.
NZDUSD Short-term Trend: Bearish
