Just two days ago I mentioned how the NZDUSD had cleared the trend line that extends from the 2016 low. However, at the time sellers hadn’t quite managed to breach the head and shoulders neckline on a daily closing basis.
With yesterday’s close, the pair has now cleared both key support levels. The reversal pattern in focus is one that I first mentioned on November 2nd. At the time, the pair was trading near 0.7285.
The 480 pip measured objective points to an eventual target near 0.6585. However, there are several support levels that sellers will need to deal with along the way.
The first area where the pair is likely to encounter a bid is 0.6966. This area served as resistance in late March before flipping to support in both June and July.
Next up is the pivot that played a crucial role between March and May at 0.6840. It’s also the 50% retracement when measuring from the 2016 low to the current 2016 high.
Last but not least is the 61.8% Fibonacci retracement at 0.6685. This area was responsible for triggering the aggressive rally in late May and also influenced prices in July and August of last year.
I remain short from 0.7331 and will look to add to the position on a retest of neckline support as new resistance.
Want to see how we are trading this setup? Click here to get lifetime access.
