NZDUSD Anticipates a Bullish Reversal

Market Analysis: NZDUSD Experiences Significant Bearish Pullback Ahead of Bullish Trend

The NZDUSD currency pair in early 2024 entered a consolidation phase, with price movements restricted between the key levels of 0.62180 and 0.58900. However, in late August, a notable breakout occurred, driving the price above the 0.62180 level. This breakout signaled the beginning of a broader bullish trend, suggesting a shift in market dynamics.

NZDUSD Significant Zones

Resistance Levels: 0.62180, 0.64020
Support Levels: 0.60430, 0.58900

Following the initial bullish push after the breakout, the current price action has entered a pullback. This retracement is evident as the price retreats from recent highs. The daily Relative Strength Index (RSI) confirms this movement, indicating a loss of bullish momentum and a gradual weakening of the upward trend.

The decline appears to be a retracement towards the daily Fair Value Gap (FVG), a zone where price imbalances are typically corrected. This pullback presents a potential buying opportunity as prices may find support at this key level. On the 4-hour chart, a reverse head and shoulders pattern has formed, aligning with the bearish trend observed on the daily timeframe. This pattern often signals a possible short-term reversal, adding strength to the likelihood of a retracement.

Market Expectation

The bearish momentum is expected to fade as the daily FVG is filled, with the 0.60430 level acting as a critical support zone. This level is likely to prevent further declines and may serve as a foundation for a renewed bullish move. If the 0.60430 level holds, it could lead to a bullish reversal, with price targets set at the 0.64020 level, aligning with the upward trajectory suggested by the breakout. Traders watching for forex signals may find this a key moment for entry into the market.

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