NZDUSD Sets for Short-Term Retracement as Market Becomes Overbought

NZDUSD Analysis – December 26

NZDUSD sets for a short-term retracement as the market becomes overbought. The general market trend maintains a bullish stance, even in light of the extended overbought signal suggested by the Stochastic Oscillator. Evidently, NZDUSD is approaching the prior peak of $0.64100. Nevertheless, a brief pullback is anticipated as the price delves further into the premium zone.

NZDUSD Key Levels

Demand Zones: $0.60600, $0.57700
Supply Zones: $0.64100, $0.65400

NZDUSD Long-Term Trend: Bullish

Approximately five months ago, originating from the premium zone, the market displayed a bearish pattern, triggered by the prolonged decrease in NZDUSD value. Since the start of the year, values have consistently declined from the $0.64110 supply zone, methodically penetrating minor support thresholds. In the second quarter, a similar high emerged at $0.63840 before the downward movement expanded into the discount zone, breaking the $0.60600 support. The $0.60600 support initially resisted selling pressure, leading to an upward swing to $0.64100.

However, NZDUSD encountered opposition at the $0.64100 level, resuming its descent. By August 7, 2023, the $0.60600 support faltered, triggering a further downward breakout and negating the significant low at $0.59900. The market’s downtrend persisted until a base formed around the $0.57700 demand area. The price algorithmically surged upward after the retracement at the $0.57700 demand region, initiating the ongoing bullish trend as it progressed into the $0.64100 supply zone.

NZDUSD Short-Term Trend: Bullish

Following the retraction from a breaker block on December 13, 2023, the bullish trend resumed on the four-hour chart. The market is currently swinging alongside a diagonal support in the premium zone.  Invalidation of the diagonal support is expected to cause a significant decline in the FVG at the discount zone before the bullish trend is resumed.

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