On Tuesday we looked at a rising wedge that had developed on the NZDUSD 4-hour chart. While there was no confirmed setup at the time, the pattern suggested that buyers were tiring.
In fact, I even stated that a pullback of some sort was likely over the coming sessions. And while buyers managed to extend prices even higher during yesterday’s session, those pre-FOMC gains have been erased in dramatic fashion.
The 100 pips gained following Tuesday’s commentary have not only been erased, but the pair is now trading 30 pips lower than it was 48 hours ago.
At the moment this sharp reversal stands a good chance of carving a bearish pin bar on the weekly time frame.
Do note, however, that the week is far from over. With more than 24 hours left, anything can happen.
The 4-hour chart below, on the other hand, is a different story. Just hours ago the pair closed below the wedge support on a 4-hour closing basis. We discussed this level at length on Tuesday.
Take note how the pair respected this level on several occasions before breaking down. The bounces from support became especially frequent following the June 12th retest.
The bids that formed along this trend line are a good indication that any retest as new resistance will attract an influx of offers. And the horizontal level at 0.7240 creates a confluence of resistance from which to watch for sell signals.
Key support comes in at 0.7125 followed by 0.7055. And as I mentioned on Tuesday, be sure to keep the trend line that extends from the 2015 low (blue level at the bottom) on your radar. It could once again become a target and act as support as it did on May 11th and 12th.
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