NZDUSD has been in an uptrend since mid-October.
However, the intermediate trend that began in early 2021 remains bearish.
So the rally since October could be nothing more than a correction within a larger downtrend.
At the same time, I wouldn’t get too greedy on any short trades, especially in these conditions.
For NZDUSD, the ideal short trade will likely materialize on a retest of the 0.6400 region.
There’s no guarantee we get it, but a retest there would offer the best risk to reward.
The 0.6400 area is intriguing due to the recent fakeout.
Notice how NZDUSD found resistance at 0.6400 earlier this month, closed above it on the 13th, and then closed below it on the 15th.
That area is what’s called a “failed level” since it failed to hold as new support.
It also means that any retest of 0.6400 as new resistance is likely to attract considerable selling pressure.
Furthermore, 0.6400 is the golden pocket of the recent selloff, meaning it’s where the 0.65 and 0.618 Fibonacci retracements line up.
Whether NZDUSD retests 0.6400 or not, we likely see a pullback to 0.6150 in the coming days, if not lower.
