NZDUSD Sets To Retrace Upward As Price Sinks Into Oversold State

NZDUSD Analysis: Market Sets To Retrace Upward As Price Sinks Into Oversold State

NZDUSD is set to retrace upward as the price sinks into an oversold state. The market is currently in a downward trend. The downward trend ensued after a reaction towards the falling trendline and overbought. Considering the overall trend, the market’s direction will likely remain bearish despite the RSI’s decline into oversold territory.

NZDUSD Significant Zones
Demand Zones: $0.59850, $0.55120
Supply Zones: $0.65380, $0.67290

From $0.55120 support, NZDUSD expanded aggressively to the upside. The Moving Averages made a bullish cross as the market continued to expand in fractals. At $0.65380 resistance, overwhelming selling pressure finally pushed the price to the downside. Throughout February 2023, NZDUSD made an aggressive decline as a Change Of Character (CHOCH) occurred. Before the CHOCH, a high formed at $0.63800, after which the decline extended downward to change the market’s character. The decline continued until an intermittent low formed at the $0.60840 price level.

NZDUSD made an upward retracement to the $0.63800 high, thereby forming relatively equal highs at the price level. The decline continued until a Break Of Structure (BOS) occurred as the price sank into the equilibrium zone. Taking the $0.55120 support and the $0.65380 resistance as the market trading range, the decline stopped at the equilibrium zone. NZDUSD swerved upward as it swept the buy-side liquidity above the equal highs at the $0.63800 price level. After bouncing off the falling trendline, the downtrend continued as NZDUSD now heads into an oversold state.

Market Expectation

According to the MA Cross, the market is bearish on the four-hour chart. However, NZDUSD might flip upward as the price hits major support at $0.59850. The expansion is expected to invalidate the diagonal resistance once the price swerves upward from the $0.59850 support.