NZDUSD Sharp Drop Triggers Prolonged Descent From Premium Zone

NZDUSD Analysis – January 21

NZDUSD Sharp Drop Triggers Prolonged Descent From the premium zone of the market’s current trading range. NZDUSD experienced a sharp drop from $0.63690 due to a Fair Value Gap. Despite recent highs, a looming decline may unfold gradually, with a potential correction or reversal at the 79.0% Fibonacci retracement level.

NZDUSD Key Levels

Demand Zones: $0.60840, $0.57730
Supply Zones: $0.63690, $0.65380

NZDUSD Long-Term Trend: Bearish

The NZDUSD witnessed a significant crash from $0.63690, triggered by a FVG (Fair Value Gap) that created downside pressure. This downward momentum persisted, driving the price to $0.59000 without a substantial correction. The descent continued until it bottomed out at $0.57730. Remarkably, this $0.57730 low marked the initiation of a new upward trend. Concurrently, the RSI (Relative Strength Index) signalled a bullish divergence, aligning lower price lows with higher RSI lows.

Initiating a spontaneous rally from the $0.57730 low, NZDUSD surged as bears exited the market in the discount zone. The current trading range of the market peaked at $0.63690 as the bears returned to the market. Despite the expansive moves since November 2023, a major descent looms, potentially unfolding in fractals, as the bulls gradually lose their grip on market control. However, a major correction or a total reversal is highly probable at the 79.0% Fibonacci retracement level of the market’s trading range.

NZDUSD Short-Term Trend: Bearish

The current trading range on the four-hour chart is bearish. The bearish move began with the reversal, which occurred at $0.63690 resistance. The ongoing descent is expected to continue for a long time; however, a brief correction may occur after the price hits $0.60840.

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