The NZDUSD reached a yearly high on Monday, but the rise quickly slowed as it dipped below the 100-bar moving average on the 4-hour chart. This average has usually been a strong support level during pullbacks. Previous drops below the 100-bar MA have been short-lived, raising doubts about the longevity of this decline. If the recent drop continues, important targets to consider include the 38.2% retracement level from May’s rally at 0.59948 and Friday’s low at 0.5994. A clear break below these targets could increase downward momentum, focusing attention on the 200-bar moving average at 0.5971 and the 50% retracement level at 0.5966 as significant support areas.

Resistance Levels Matter

In terms of resistance, key levels are found between 0.6018 and 0.6029. If the price stays below this range, the bearish outlook remains valid. The recent rise in NZDUSD to a new yearly high seemed encouraging at first. Traders noticed its strength, but it quickly diminished as the pair fell below the 100-bar moving average on the four-hour chart. This average has previously provided stability during price declines. Historically, drops below it have not lasted long or led to significant downward movement. However, this time feels different. From a technical standpoint, if the price doesn’t recover soon and keeps falling, the retracement level at 0.59948 becomes a critical point to watch. The close alignment of Monday’s low with Friday’s provides a strong signal. If the price breaks and stays below this level, it indicates that bearish pressure is starting to build more consistently. If this pressure grows, focus will shift to the 200-bar moving average at 0.5971. What used to be a long-term filter may now serve as support, serving as an additional check for further price declines. Just below that is the 50% Fibonacci level at 0.5966, making the area between 0.5971 and 0.5966 crucial.

Tight Ranges Can Signal Breaks

For upward movement, the price needs to break above the 0.6018 to 0.6029 range. Until that happens, downward pressure remains. We treat this range as strong resistance for now, anticipating it will filter out any intraday spikes or recoveries. As long as the price stays below this zone, bearish strategies remain relevant. Price levels are not random. McGeever once said that technicals matter only because traders agree they do, and we’re witnessing that now. The alignment of Fibonacci levels, moving averages, and recent highs and lows is not coincidental—they serve as behavioral checkpoints for short-term trading. For traders, it’s not just about whether the price breaks these levels, but how it does so. Strong, high-volume moves below key supports require different strategies than shallow dips that reverse during the session. We’ve also seen that price ranges often tighten in quiet conditions without new catalysts. This coiling usually precedes sharper price movements. While waiting might test patience, staying alert is essential. It’s crucial to identify which levels act as balance points and to respond quickly when those levels are breached. Currently, the setup is largely technical rather than influenced by macro factors. Price movements within defined levels indicate that market dynamics are driven more by chart patterns than by fundamental changes. In these situations, reactive traders tend to perform better as they allow the price to signal its intentions before risking capital. Create your live VT Markets account and start trading now.

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