Bottom line: NZDUSD might have retraced to find major support around 61.8% fibonacci levels. The bullish structure should remain intact till prices stay above 0.6200.
Technical Analysis:
NZDUSD bulls might be looking to come back strong after printing 0.6378 lows this early this week. Please note that it has found support at the fibonacci 0.618 retracement of previous rally from 0.6200 through 0.6755 respectively. Continuing from what was discussed last week the wave counts have been corrected. The rally between 0.6200 and 0.6755 could be Wave 1 followed by a corrective drop A-B-C terminating at 0.6378 levels as Wave 2. Also note that a Morning Star candlestick pattern has completed on the daily chart, indicating a potential bullish reversal. Furthermore, the RSI (not shown here) has sharply risen through the 40 levels since 0.6378 lows earlier. All the above indicate that NZDUSD might have formed a potential bottom and could be ready for the next rally. Minimum projections for a potential Wave 3 target could be around 0.7100 levels. Most traders might be looking to consider longs around current price action (0.6440/50) with protective stops at 0.6200 and potential target above 0.7100 respectively. It should be noted that the corrective drop since 0.6755 has probably unfolded into a classic Zigzag pattern which is 5-3-5 at a higher degree. It was best probable to consider re-adjusting the counts for a potential Wave 1 and 2 respectively. If the above is correct, Wave 3 rally could be underway since 0.6378 levels and bulls are expected to remain in control from here. Immediate price resistance is seen at 0.6500 levels and a break higher would be much encouraging for bulls. Until NZDUSD stays above 0.6324 levels, the above bullish structure should remain intact. Watch out for a break above 0.6500 as short term potential targets.
Prepared by
Harsh Japee, Technical Analyst.
NZDUSD Chart
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