NZDUSD might be preparing to break below 0.6375 initial support and the trend line support. It is holding up the 0.6600 handle, which is marked as immediate resistance. A push below 0.6500 would confirm a meaningful top in place.
NZDUSD potential wave counts are as follows. The rally since 0.5470 through 0.6600 seems to have carved Waves 1, 2, and 3 until now. Since the rally is 3 waves until now, we have labelled as potential Waves A, B and C as well.
Please note that major resistance lies ahead around 0.6760 levels and if bulls are able to break higher, NZDUSD would turn bullish for a long term since an impulse would be complete there. Until that happens, we need to be prepared for a turn lower.
At the moment, until 0.6600 remains intact, NZDUSD is poised to produce a corrective drop towards fibonacci 0.618 of the entire rally between 0.5470 and 0.6600 respectively. Wave A of the proposed A-B-C drop might terminate around 0.6170/80 levels.
Wave B could pullback higher towards 0.6400 mark, before Wave C drops lower towards 0.5900 levels respectively. For the above proposed structure to materialize, we need to see NZDUSD to break below 0.6375 support, going further.
Alternately, a break above 0.6600 would open doors towards 0.6760, which is marked as the next major resistance. NZDUSD is expected to produce a bearish reversal, if prices manage to reach there. Traders might remain short for now with stops above 0.6600 mark.
Technical Analysis Team
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