NZDUSD Bears Hold Below 0.6715 Resistance

28 August 2020

NZDUSD might have carved a lower top yesterday around 0.6675 levels. Also note that a doji has been produced on the daily chart, indicating a potential reversal. Bears might be looking to remain in control from here and push prices through 0.6230 levels at least.

NZDUSD probable wave counts are as follows: The currency had been in control of bulls since 0.5470 lows. It has managed to complete an impulse rally from 0.5470 through 0.6715 highs recently. If the above proposed counts are correct, it should produce a corrective drop going further.

Also note that a past resistance around 0.6755 was almost taken out, which also indicates probability for a meaningful corrective drop. If a larger degree Wave (1) is in place at 0.6715, we should witness a similar degree corrective drop Wave (2), unfolding as A-B-C.

The fibonacci 0.618 retracement of the entire rally (Wave (1)) is seen through 0.5950 levels. High probability remains for a bullish bounce if prices manage to drop through the above handle. Initial fibonacci support comes in around the 0.6230 mark though.

Immediate resistance is seen towards 0.6715, while support is seen at 0.6375 levels respectively. Also note that prices had entered into sell zone of the support trend line and barely tested the backside, which should act as resistance from here on.

Traders might be preparing to initiate fresh short positions from current levels (0.6640/50), with protective stops above 0.6715 and potential targets below 0.6230 and 0.6000 respectively. Only a break above 0.6715 would delay matters further.

Prepared by
Technical Analysis Team

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