Exactly one month ago, I pointed out a rather bullish looking pattern on NZDUSD.
The descending channel that formed between June and October offered a strong hint that a trend change was around the corner.
A channel like this following a strong move lower often acts just like a falling wedge.
This time was no different.
It was the daily close back above 0.6520 on October 15th that prompted me to write the commentary on the 16th.
Two weeks later, buyers got the job done with a daily close above descending channel resistance.
Remember, I use New York close (5 pm EST) charts. You can go here to get instant access to the same charts I use.
That breakout had us watching for buying opportunities near 0.6610. Sellers didn’t quite push prices that low, but we did see a move to 0.6626 before the next leg higher began.
On November 7th, I mentioned another opportunity to buy NZDUSD.
This time we were looking for a retest of the 0.6715 area as new support. That retest materialized between the 12th and 13th of this month.
The target for the second leg was 0.6850. Buyers are testing the level as I type this.
So now that you’re caught up, what’s the game plan moving forward?
Well, it’s similar to the one I released on the 7th.
With NZDUSD testing 0.6850 resistance, it’s time to see if buyers can trigger yet another breakout next week.
As of this writing, I have no reason to believe buyers won’t extend prices above 0.6850. That leaves me waiting for a daily close above it followed by a retest as new support.
There is a chance that 0.6850 is the final resting place for this bull move. But as long as NZDUSD is in rally mode, I’m only interested in buying opportunities.
A close above 0.6850 next week would pave the way for a move to 0.6960.
The final target for a channel breakout like this is usually the structure’s inception point. For NZDUSD, that’s the June high at 0.7060.