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HomeUncategorizedNZD/USD price analysis: Dollar depreciation brings significant correction risk

NZD/USD price analysis: Dollar depreciation brings significant correction risk

  • NZD/USD bears moved early and may be clearing the way for a bullish correction.
  • The dollar is stagnant, which is good for commodity FX.

NZD/USD bulls may be about to step into early Asian trade due to trade The deficit fell to a record high. This has seen price move into a key support area and previous lows. However, if the stock market opens on the right foot in Tokyo after Wall Street closes, then we could see the New Zealand dollar move higher. The following chart illustrates such a prospect:

NZD/USD daily chart

The daily chart shows that the price has broken below the trend line, and a reversal may occur in the coming day. However, given the momentum of the price, a support area can be seen first. Having said that, the USD may be on the verge of a bearish correction:

DXY H1 Chart

NZD/USD H1 Chart

Pattern M is a reversal pattern that sees price moving towards the neckline , or at least a higher correction.

NZD/USD 5 minute chart

Prices probably won’t do anything until Tokyo and given the low Wall Street overnight Volume and volatility, those who trade kiwis can have a bumpy and long journey. However, the 5-minute chart is structured as shown in the chart above, and if the bulls commit, Friday’s correction is likely to follow the aforementioned route.

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