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Do you recall what happened to NZDUSD on July 30?
The pair closed below ascending channel support that extends from the mid-June swing low.
At the time, that 0.6490 area was the year-to-date low.
I wrote about this breakdown on the 29th stating that a close below 0.6630 would expose 0.6490.
The NZDUSD reached our 140-pip target on August 5.
But that was just the start.
On August 5, I wrote about how the 0.6590 area was likely to attract sellers.
Sure enough, NZDUSD hit a session high of 0.6589 on the 6th before selling off hard over the next 24 hours.
In that post, we also discussed how this continuation pattern could trigger a move as low as 0.6350.
Sellers reached that level on August 26.
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So where to from here?
Now that the bearish flag pattern has played out, we could see NZDUSD claw back some losses.
That said, the downtrend is intact below that 0.6350 area. You can see how sellers defended it as new resistance on Thursday.
It’s going to take a daily close above 0.6350 to ease the selling pressure.
However, I also wouldn’t be surprised to see the pair tag the 0.6250 region before garnering attention from buyers.
Notice how 0.6200/50 was a critical support area for NZDUSD in August and September of 2015.
I’m not opposed to trading this both ways, but I do need to see what happens here between 0.6200/50 and 0.6350 before making a decision.