The last time I wrote about NZDUSD was April 21st.
That was the first time I discussed the potential for a 2,000 pip drop.
Let’s just say my view wasn’t all that popular with some people.
But here we are eleven trading days later, and the NZDUSD is up 40 pips.
To some, a 40 pip gain may sound like a lot.
However, when you compare it to the 900 pip plunge in March that took just eight days, the latest correction is found wanting.
So, I’ll go ahead and revise my view from April and say there is now a 2,100 pip opportunity unfolding.
Could I be wrong?
Of course, but even if you compare the angle of this latest rally to the March selloff, you’ll see that NZDUSD is in correction territory.
What do angles have to do with anything?
Everything, as the angle of one move relative to another illustrates the amount of supply and demand.
We had an impulsive move lower in March, and now a correction that has lasted for six weeks.
That means the next phase is likely another impulse move lower.
And if you saw Saturday’s forecast video, you know about the weekly bearish pin bar that developed on the AUDUSD.
It’s no secret that the AUDUSD and NZDUSD often move in tandem.
So, a similar analysis of the weekly time frame can be applied to the New Zealand dollar.
Last but not least, please understand that both the Australian dollar and New Zealand dollar are tracking equities closely.
That adds a headwind to any shorts as we’re basically fighting the central banks that are scrambling to prop up equities.
It’s why the AUDUSD and NZDUSD have remained buoyant.
With that in mind, I kept this morning’s short position from 0.6054 relatively small.
I announced that entry in the member’s area.
I won’t add to the position until I see NZDUSD take out that 0.5950/60 area.
That would open the door to 0.5860 and perhaps 0.5650.
My bearish outlook for NZDUSD will remain intact as long as the pair trades below 0.6200 on a daily closing basis.