The NZDUSD has reached the top of a pattern I pointed out to Daily Price Action members on Monday.
But before we get to that, I want to recap some of the recent price action.
Shortly after bottoming around 0.6200, the NZDUSD started to look relatively bullish.
Several factors caused me to think a turn higher was likely.
First was the twenty-year trend line support that extends from the 2000 and 2001 lows.
The second factor was a possible falling wedge on the weekly time frame.
Watch the October 31 video where I point out the long-term trend line as well as the falling wedge pattern.
We also had what appeared to be an inverse head and shoulders developing on the daily time frame.
I discussed this pattern several times, including in the November 19 video.
So what level has caused today’s intraday dip?
As you may well know, I’m a fan of using channels. They can help you to identify entries as well as exits.
If we draw an ascending channel starting with the October 1 low and connect the upper level with the October high, we get the structure below.
I drew this same channel on Monday in the member’s only video stating that it could serve as a guide for NZDUSD going forward.
In other words, it was our first target for any longs.
Here is that portion of the video I made for members on Monday:
You can learn more about how to use this technique to find profit targets within uptrends and downtrends in this post.
Whether or not this is the start of a rotation lower is unknown.
What I do know is that the NZDUSD is relatively overextended and, therefore, may need to consolidate before the next leg higher can materialize.
But I’m not interested in selling the pair.
The inverse head and shoulders that I’ve mentioned several times is still in play, which means a move to 0.6580 or even 0.6660 shouldn’t be ruled out.
I’m also still relatively bearish the US dollar in the short-term.
Of course, that’s just my opinion.
Key support for the pair comes in at 0.6490 followed by the confluence of support around the 0.6430/40 area we’ve had our eye on for weeks.