NZDUSD Converges Within A Triangle Pattern As Redistribution Looms

NZDUSD Analysis: Price Converges Within A Triangle Pattern As Redistribution Looms

NZDUSD converges within a triangle pattern as redistribution looms. The convergence is about to take place as sellers prepare to dump the New Zealand dollar for the US dollar. While the market’s order flow has been bearish for more than three months, more declines appear to be coming. As the price approaches the upper band of the Bollinger Bands, the bears are likely getting set.

NZDUSD Significant Zones
Demand Zones: $0.59850, $0.55120
Supply Zones: $0.65380, $0.70340

The triangle pattern consists of the major trendline and diagonal support. As February began, the MACD (Moving Average Convergence Divergence) dived back below the zero line. Before the dive, the MACD had stayed above the zero line for quite some time. The dive indicated the bears’ presence in the first quarter of the year 2023. Moreover, NZDUSD hit the upper band of the Bollinger Bands, causing a selling effect, which contributed to the intensive sell.

The trading range in the first quarter of the year was between $0.65380 and $0.56620 price levels. A bounce off the optimal trade entry at the range premium caused a further decline in the NZDUSD. This brought the price into the $0.59850 demand zone. From the $0.59850 demand zone, NZDUSD heads upward to converge within the two transversal lines that constitute the triangle pattern. A bounce off the Fair Value Gap will likely lead the price to the peak of the distribution phase.

Market Expectation

Following the breakout from the previous four-hour diagonal resistance, the NZDUSD flipped bullishly. The market direction is expected to remain bullish until the major trendline is hit.