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Yesterday was a wild ride for price action on the back of an eventful FOMC statement. I had previously mentioned that this event in particular would be more volatile than others in recent past, and with EURUSD seeing its largest rally in six years, I would say the event didn’t disappoint.
But I don’t want to talk about EURUSD today. I want to talk about a pair that I think has more upside potential than EURUSD at the moment. That pair is NZDUSD.
I’ve been bearish on the Kiwi for quite some time. In fact I traded the decline from August of last year several times. However yesterday’s reality check for USD bulls has this pair eyeing higher prices.
How much higher?
That depends on two things. The first being trend line resistance from July of last year. The pair needs to break and close above this trend line in order to have any chance of reaching higher levels.
But there’s more to it than that. The second thing that needs to happen is a daily close above .7617. This level represents the February high and January low, but more importantly it’s the level that needs to be broken in order to confirm the double bottom between February and March. Break that and we could see as high as .8030 in the coming weeks.
Failure to move above this level could result in a resumption of the downtrend.
Summary: Wait for a daily close above .7617 and then watch for a retest as new support. Key resistance comes in at .7890 and .8030, the latter being the measured objective for the double bottom.