With this steady drop on NZDUSD, a huge forex market correction may be overdue, as the MACD has been hinting that the move is overdone. NZDUSD has been on a massive downtrend in the past few months, as price has fallen from the .8800 major psychological resistance all the way down to its .8100 levels for now. Price appears to be headed towards the .8000 support zone, which could hold as a floor for any declines .
For now, price could pull up to the 100 SMA, which has held as dynamic resistance so far. A higher forex market retracement could lead to a test of the 200 SMA, which is near the .8300 major psychological resistance.
Forex Market Pullback
Stochastic is reflecting a pickup in buying forex market momentum, as the indicator has moved out of the oversold region and is making its way to the overbought area. Once this technical indicator crosses down from the overbought zone though, the ongoing downtrend might resume and take NZDUSD to new lows.
A strong return in selling pressure might even lead to a break of the .8000 support zone and perhaps more losses for NZDUSD. A short-term bounce at the .8000 major psychological area could be seen though as forex market traders might book some profits off their short Kiwi positions at that level.
Catalysts for this forex market retracement setup include the upcoming trade balance release from New Zealand and a couple of manufacturing indices from the US. A weak trade reading might be seen, as commodity and dairy prices have been sliding recently while China has seen a bit of a slowdown in demand. This could lead to a drop to .8000 before the forex market even pulls back, but a strong showing could lead to quick bounce for this NZDUSD pair.
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