The NZDUSD moved sharply lower yesterday after the Reserve Bank of New Zealand rate decision was unchanged with a more dovish bias. That was in contrast to the market assessment that the central bank would be more hawkish (and perhaps raise rates).
Looking at the 4-hour chart, yesterday the price of the pair fell below the 100 and 200-bar moving averages near 0.6127, and then later the 100-day moving average of 0.60933. However, sellers could not push the price below the 200-day moving average currently at 0.60758 (lower green line). The price rebounded into the close yesterday.
Today, the price action has continued the ups and downs.
The pair moved to a corrective high up to 0.6110 helped by lower rates in the US, but the move to the downside has resumed with the price moving back down to retest the 200-day moving average. The low price for the day reached 0.60759 just above the 200-day moving average. The current price trades at 0.6085 as the buyers and sellers continue to battle.
What next?
It still takes a move below the 200-day moving average to increase the bearish bias. On a break, the swing low from January at 0.6061 would be the next target. Below that and the low price for 2024 at 0.60372 would be eyed by sellers.
Conversely, continuing to hold the 200-day moving average keeps the dip buyers in play, but those buyers would still need to push the price back above its 100-day moving average at 0.60933 to give buyers more confidence and relieve some of the pressure. Absent that, and the buyers are not winning – the sellers are still firmly in control.
This article was written by Greg Michalowski at www.forexlive.com. Source