NZD/USD clocks fresh five-month high, looks overbought
-
NZDUSD stages a steady recovery from 2023 lows.
-
But momentum indicators warn of overbought risks.
-
Is there a pullback in sight?
NZDUSD has been in a steep uptrend since its 2023 low of 0.5772, generating consecutive higher highs and a V-shaped recovery pattern. However, the latest advance seems substantially overstretched as the RSI has been within its overbought zone for more than a week.
Should the price defy overbought signals, the bulls could aim at 0.6373, which is the 78.6% Fibonacci retracement of the 0.6536-0.5772 downtrend. Violating that crucial zone, the pair may ascend towards the December 2022 resistance of 0.6441. Even higher, further upside attempts could stall at the 2023 peak of 0.6536.
On the flipside, if the pair experiences a downside correction, immediate support could be met at the 61.8% Fibo of 0.6244. A break below that region could shift the spotlight to the 50.0% Fibo of 0.6154. Failing to halt there, the pair could face the 38.2% Fibo of 0.6064.
Overall, NZDUSD stormed to a fresh five-month high on Wednesday, but its advance is starting to look overdone. Can the pair extend its bullish structure or are we heading towards a correction?
Author
Stefanos joined XM as a Junior Investment Analyst in September 2021. He conducts daily market research on the currency, commodity and equity markets, from a fundamental and a technical perspective.
