Bottom line: NZDUSD needs to hold above 0.6200 levels to keep the bullish structure intact. A break above 0.6350/60 would now confirm that a bottom is in place.
Technical Analysis:
NZDUSD prints yet another marginal low at 0.6283 levels today and it is expected to produce a bullish reversal from these levels. It still remains around the Fibonacci 0.786 support converging with the past resistance turned future support zone as well. Looking into the wave structure since 0.6200 lows in October 2019, NZDUSD seems to have terminated Wave 1 at 0.6755 and is now looking to carve a Wave 2 low, before Wave 3 rally could resume. Ideally, Wave 2 terminates around the Fibonacci 0.618 retracement but it sometimes drops mush deeper. Bottom line remains that Wave 2 cannot retrace Wave 1 more than 100% hence it should terminate above 0.6200 levels if the bullish structure has to hold. Most traders might be willing to wait until NZDUSD produces a bullish turn from current price before initiating fresh long positions. Aggressive traders might have added longs earlier with a protective stop at 0.6200 and potential target above 0.7100 and 0.7200 respectively. It is not shown here, but NZDUSD is still showing bullish divergence on the Daily Chart. This could be seen as a potential reversal ahead. Also note that Wave 3 is usually the largest and sharpest and looking into the risk reward ratio offered here, NZDUSD remains a potential buy on dip chart. With regards to the price action, a break above 0.6357 should confirm that a meaningful low is in place already and that bulls are poised to print higher highs and higher lows going forward. Watch out for a bullish reversal candlestick pattern around current levels, as NZDUSD prepares for a Wave 3 rally ahead.
Prepared by
Harsh Japee, Technical Analyst.
NZDUSD Chart
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