NZDUSD Breaks Double Top Neckline, Starts Upward Retracement

NZDUSD Analysis: Upward Retracement Succeeds Breakout From The Double Top Neckline

NZDUSD upward retracement succeeds in breaking out of the double top neckline. The upward retracement becomes necessary as the price hits a discount range. The discount array is constituted by an FVG (Fair Value Gap) created on November 11, 2022. This was when the aggressive rally from a very low price level to a premium was ongoing.

NZDUSD Significant Zones
Demand Zones: 0.57950, 0.55120
Supply Zones: 0.61560, 0.65380

The upward expansion that engineered the creation of the FVG occurred between mid-October 2022 and January 2023. As a result of the buying pressure at the 0.55120 support, the bears exited the market. The absence of the bears could be seen in the price’s aggressive rally until the premium was reached. As the breakout into the 0.61560 supply zone occurred, the buying momentum of the NZDUSD began to show signs of weakness. However, the ongoing downtrend did not begin until the price reached the $0.65380 resistance.

As the upward trend finally stopped after hitting the $0.65380 resistance, NZDUSD started to head downward. During the downtrend, a double top formed on May 11, 2023. After the double top pattern, NZDUSD sellers confidently keep placing more sell orders. The overall trend has been bearish since the MACD indicator crossed the zero line in February 2023. The MACD (Moving Average Convergence Divergence) still shows that the market still has more bearish moves to make. However, owing to the buying pressure from the FVG, NZDUSD will likely make a bullish retracement into the premium zone.

Market Expectation

On the four-hour chart, the market is in an upward trend. As it appears, NZDUSD seems to be heading into the premium zone above the 50.0% Fibonacci retracement level.