Has NZDUSD bottomed? If so, how high could it go?
Watch the video below to find out what I think.
Be sure to also scroll down for more commentary and an annotated chart.
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The last time I wrote about NZDUSD the pair was starting its next leg lower.
That July 30 close confirmed the bearish flag pattern and also triggered a 400 pip move lower from the kiwi.
Fast forward to today, and we can see that NZDUSD is trying to bottom.
In fact, it may have already done so.
Notice how the pair is in the process of carving what could be a higher low following the October 1 low of 0.6203.
That would be the first higher low since early July.
There is also a multi-year falling wedge on NZDUSD that could help push the pair higher.
And if that wasn’t enough, the NZDUSD appears to be bouncing from a trend line support that dates back to the 2001 low.
Watch the video above to see how all of this is likely to play out.
But before any meaningful bounce can materialize, buyers need to first take out descending channel resistance near 0.6360.
This appears to be a downward sloping flag that could serve as a bottoming pattern.
We’ll see how NZDUSD reacts to resistance near 0.6360, but my guess is we will see a rejection of some sort.
I’m not interested in selling the pair, though.
I would rather wait to see if buyers can break out of this multi-month consolidation and force a push higher.
If they can, we could see a run at the September highs around 0.6430.
A close above that would expose 0.6490 and perhaps 0.6580.
Alternatively, a move below this week’s low at 0.6240 would signal weakness and also re-expose the 0.6200 support area.
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