If you’re finding it hard to understand what’s going on with the NZDUSD price action, don’t worry, you’re not alone. Price action can be confusing, but looking at the technical aspects can help shed some light on the situation. Imagine the price action as a battle between buyers and sellers – this perspective can make things clearer.
In the NZDUSD pair, we saw that the 61.8% level was acting as support. I mentioned this in my previous post about the pair. I also noted that if the support at the 61.8% retracement held (which it did), certain things should happen. Specifically, I mentioned that if the 61.8% level continued to hold as support, the price would move higher until it reached the 200-day moving average, which would then act as resistance.
So, what actually happened? The 61.8% level did indeed hold as support, causing the price to move higher. However, once the price reached the 200-day MA, the rally was stalled. This indicates that a battle is currently taking place between buyers and sellers. Today, we saw the price of the NZDUSD drop below the 61.8% level due to volatility from US data releases. However, the break below was quickly rejected, and the price has now settled between the two levels. This kind of choppy price action is common after data releases, but the rejection suggests that the market is evenly balanced.
When you see this kind of battle between buyers and sellers, it’s important to look at the price action and try to create a narrative about the struggle. By framing it in terms of winners and losers, you can start to see what needs to happen for one side to emerge victorious. In the case of the NZDUSD pair, a win for the buyers would involve the price staying above the 200-day MA and moving higher towards the 100-day MA. On the other hand, a win for the sellers would mean the price staying below the 61.8% level and moving lower from there.
So, for now, we can enjoy the story of this battle between buyers and sellers, but we should also be prepared for continued choppy price action. Eventually, one side will emerge victorious, but until then, both buyers and sellers will continue to fight for control.
