NZDUSD broke below the trend line support since March 23 lows around 0.5470 levels. The currency had managed to print high around 0.6715 early this month and looks like bears are successful in holding prices below that resistance.
NZDUSD probable wave counts since 0.5470 are as follows: The rally from 0.5470 through 0.6715 seems to have clearly sub-divided into 5 waves. The impulse has been marked as a larger degree Wave (1) on the daily chat here.
An impulse wave would be ideally followed by a correction in the opposite direction. Most likely, NZDUSD is on its way to produce a meaningful corrective drop towards 0.5942 levels, going further. If we presume the corrective structure to be a zigzag, the first wave might find support around 0.6200/30 levels going forward.
If the above proposed wave counts are correct, NZDUSD should stay below 0.7215 mark and proceed in an A-B-C wave structure towards 0.5940/50 levels. A zigzag would unfold as a 5-3-5 while a flat would unfold as a 3-3-5 in terms of the sub-waves.
Also note that fibonacci 0.618 retracement is seen to be passing through 0.5940/50 levels. Probability remains high for a bullish turn, if prices managed to drop to those levels. NZDUSD might resume its rally towards higher levels after dropping through 0.5950 mark.
Traders might be looking to take profits on long positions initiated earlier. Aggressive traders might also want to initiate short positions with stops above 0.6715 and projected targets towards 0.6200 and 0.5950 respectively.
Technical Analysis Team
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