On March 10th, I wrote about an NZDUSD terminal pattern.
The upper boundary of that structure extends from the 2014 high.
The lower boundary, on the other hand, dates back to the 2000 lows.
It’s no doubt a massive terminal pattern.
Here’s a view of the monthly time frame:
Hours after I released Tuesday’s post, I announced my NZDUSD short position in the membership forums.
So far, so good, as we can see that the NZDUSD weakened by 180 pips yesterday.
That position is well in profit, and I have no intention of exiting anytime soon.
Given the significance of the wedge support that extends from the 2000 lows, a break below it could open up much lower levels.
A few of those support levels include 0.5920, 0.5650, and 0.5330.
Even the 2008 – 2009 financial crisis lows around 0.5000 could come into play.
To clarify, I’m not saying this will happen.
There are no guarantees in this game.
And even if a 1,000 pip move lower is ahead of us, I’m not insinuating it will happen within days or weeks.
Any move of that significance would likely take months to play out.
But make no mistake, a breakdown from a twenty-year support level like the one above is likely to send the New Zealand dollar much, much lower.
Could this be a false break?
Of course. As with anything in trading or life, anything is possible.
That said, as long as the NZDUSD remains below that 0.6200 area I wrote about on Tuesday, I favor shorts here.
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