Price Analysis – Tapering Movement Will Lead To a Bullish or Bearish Breakout?
A bullish or bearish breakout is on the cards as NZDUSD tapers down into a descending triangle. This is a formation that the market has taken within a large consolidation movement. NZDUSD has been trapped in a ranging movement since ascending above 0.69400 on the 24th of November. The 0.73000 resistance is acting as a lid to prevent price from moving up. It was breached once though, on the 22nd of February 2021, but kiwi fell back into consolidation.
Key Levels
Resistance Levels: 0.71300, 0.7300, 0.74600
Support Levels: 0.69400, 0.67800, 0.66000
The market spent ample time in the upper half of the range zone before diving into the lower half on the 23rd of March 2021. Lesser time was spent here before price climbed back to the upper half. NZDUSD has fallen once more to the lower half, and this time around, the market has conformed to a descending triangle. This is likely to change the look of things as price may break down and out of the channel. In another way, it may only help it move back to the upper half.
The prospect of a fall out of the consolidation zone is quite high. Some daily candles have stuck their long wicks below 0.69400 and even below the base of the descending channel. But somehow, price is still holding above the 0.69400 support. Currently, kiwi is testing the upper border of the triangle and bulls could also forcefully push the market up. This rally will ensure NZDUSD moves back to the upper half and probably break out of the upper border.
Market Anticipation
The 4-hour chart shows that there have been two false breakouts below and one false break out above the descending triangle. The MA period 20 (Moving Average) has been undulating along with the market movement, but it is currently below the 4-hour candles, showing the market is currently bullish. The RSI (Relative Strength Index) is upward abounding and has its signal at the 60.96 level currently.
If the buyers can uphold the current momentum, price will push up out of the triangle to 0.71300, else, as looks most likely, NZDUSD will be knocked down out of the triangle to 0.67800.
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