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MTrading Team • 2024-01-22

“Double Doji” lures big-time NZDUSD bulls as key week begins

“Double Doji” lures big-time NZDUSD bulls as key week begins

NZDUSD edges higher past 0.6100 while defending the rebound from 200-SMA during early hours of the key week comprising New Zealand (NZ) Consumer Price Index (CPI) and the US PMIs for January. In doing so, the Kiwi pair also justifies the “Double Doji” bullish candlestick formation to consolidate the biggest weekly loss in six months. Additionally favoring the bullish bias is the RSI (14) line’s rebound from nearly oversold conditions and receding bearish bias of the MACD signals. It’s worth noting, however, that a daily closing beyond 0.6140 becomes necessary to confirm the bullish candlestick pattern. In that case, a convergence of a three-week-old falling resistance line and 23.6% Fibonacci retracement of October-December 2023 upside, near 0.6230, will gain the market’s attention ahead of the late 2023 peak surrounding 0.6370.

On the flip side, the 200-SMA level of 0.6090 restricts immediate downside of the NZDUSD pair. Following that, the 50% and 61.8% Fibonacci ratios could test the Kiwi pair bears around 0.6070 and 0.6000 respectively. If at all the NZ inflation fails to inspire the pair buyers and/or the US data came in too strong and pushes back the dovish Fed concerns, the sellers won’t hesitate to target the mid-November 2023 bottom of near 0.5860 before aiming for the previous yearly low of around 0.5770.

Overall, NZDUSD pair’s recovery appears overdue but the fundamentals need to back the upside and hence bulls should remain cautious.

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