NZDUSD seems to be preparing to push lower towards 0.6300 levels in the near term. Bears have been successful to drop prices from 0.6790 highs and as the currency looks to carve a lower high, before giving up again. Bottom line remains that 0.6790 should hold, going forward.
NZDUSD probable wave structure is as follows. After having print 0.5470 lows in March 2020, the currency has remained in control of bulls through 0.6790 highs. The entire rally can be clearly sub-divided into 5 waves, making in impulse Wave (1) here on the chart.
Ideally, an impulse wave should be followed by a corrective wave in the opposite direction. Furthermore, NZDUSD has also taken out a past resistance around 0.6755 levels. Bulls have successfully registered themselves confirming they are here to stay for long.
Having said that, high probability remains for a meaningful corrective drop towards 0.6300 levels at least, until prices stay below 0.6790 mark. The drop might be unfolding as a flat or a zigzag structure, if not a more complex formation.
NZDUSD might complete its 3 waves corrective drop towards 0.5950 levels, which is also marked with fibonacci 0.618 retracement of the entire rally between 0.5470 and 0.6790 respectively. We shall bring up the wave structure again, once price action confirms 0.6300 drop.
Traders might be inclined to initiate fresh short positions from around 0.6750 resistance zone, with protective stops above 0.6790 mark and projected targets below 0.6300 levels, going forward.
Technical Analysis Team
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