NZD/USD Price Analysis: Oversold oscillators signal a pullback to 10-EMA

• A test of the lower boundary of the demand zone could result in a pullback.
• Investors should brace for a mean reversion to the 10-EMA.
• Momentum oscillator RSI (14) is signaling an oversold situation.

The NZD/USD pair is oscillating in a narrow range of 0.6429-0.6438 after a mild rebound from 0.6413 as momentum oscillators turned extremely oversold on small and medium timeframes. The asset has displayed an eight-day losing streak and is likely to remain on tenterhooks going forward. The kiwi bulls got fragile last week after slipping below yearly lows at 0.6529 vertically.

The major has drifted lower sharply to near the demand zone placed in a narrow range from 15 June 2020 low at 0.6381 to 9 March 2020 high at 0.6450. The greenback bulls are likely to display exhaustion after an intense sell-off and a pullback rally could be witnessed.

The 10- and 20-period Exponential Moving Averages (EMAs) at 0.6559 and 0.6742 respectively are trending lower, which still favors the downside.

However, the Relative Strength Index (RSI) (14) has touched a low of 22.17 on Monday, which signals that an oversold situation could be followed by a pullback.

Should the asset touches the lower boundary of the above-mentioned demand zone at 0.6381, a pullback move will drive the asset towards Monday’s high at 0.6475, followed by mean reversion to 10-EMA at 0.6559.

On the flip side, kiwi bulls could lose further if the asset tumbles below the demand zone at 0.6381 decisively. This will drag the major further towards 8 November 2019 and 16 October 2019 at 0.6322 and 0.6282 respectively.

NZD/USD daily chart