- NZDUSD posts an almost 3-month high on Tuesday
- But the risk of an impending correction increases
- Oscillators approach overbought conditions
NZDUSD has been in an aggressive uptrend following its 2024 bottom of 0.5851 in mid-April. On Tuesday, the pair stormed to its highest level since March 8 before sustaining minor losses probably due to some profit taking.
Should the bulls attempt to push the price higher, immediate resistance could be found at the February-March double top region of 0.6215. A violation of that zone could pave the way for 0.6257, which is the 78.6% Fibonacci retracement of the 0.6368-0.5851 downleg. Failing to halt there, the pair may challenge the December 2023 high of 0.6368.
On the flipside, if the recovery falters, the 61.8% Fibo of 0.6170 could prevent initial declines. Sliding beneath that floor, the price could descend towards the 50.0% Fibo of 0.6109. Even lower, the 38.2% Fibo of 0.6048 could prove to be the next barricade for the bears to overcome.
Overall, NZDUSD has been in a recovery mode for more than a month now, generating a clear structure of higher highs. However, the risk of a pullback is present considering that the short-term oscillators are approaching overbought levels.
