On March 10th, I discussed the breakout potential of NZDUSD.
The multi-year wedge pattern was going to provide us with a breakout, one way or the other.
The floor of that wedge extends from the 2000 lows with the ceiling coming off of the 2014 high.
Hours after I wrote the March 10th post, I shorted the NZDUSD just above the 0.6300 handle.
I shared this entry with Daily Price Action members in the NZDUSD forum.
Here’s what I wrote to members on March 10th:
I followed that comment by stating that NZDUSD has 1,000+ pip (downside) potential, which I still believe to be true.
I took a partial profit on the position last week when it was more than 600 pips in the green.
If you watched Sunday’s forecast video, you know 0.5650 is support.
It’s a level that has influenced the NZDUSD since 1998.
Take a look at the monthly time frame between 1998 and 2003 to get a sense of why I consider 0.5650 to be so significant.
It’s no surprise then to see the NZDUSD rallying from 0.5650 this week.
On Sunday, I also discussed how 0.5920 and 0.6200 are both key resistance levels to keep an eye on.
0.5920 was key support for the pair between 2004 and 2006, while 0.6200 is the bottom of that multi-year channel floor from the 2000 lows.
Those are two levels (0.5920 and 0.6200) that could produce short opportunities in the coming days and weeks.
In the meantime, however, I’d like to see NZDUSD higher.
That would help to confirm the short-term descending channel I’ve drawn in the chart below.
Notice that the NZDUSD tested the bottom of that descending channel on March 19th.
If this pattern is significant, a move to 0.5920 or even 0.6200 would not be a surprise.
In summary, NZDUSD could strengthen in the short-term while above 0.5650, but the long-term downtrend is intact with resistance at 0.5920 and 0.6200.
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