NZDUSD hits resistance around 0.6600 levels before reversing yesterday. It is too early to confirm at this point, but potential remains for a meaningful top in place around 0.6600 mark. A break below 0.6375 would confirm that NZDUSD bears are in control.
Let us have a look at potential wave counts since 0.5470 lows. The rally between 0.5470 and 0.6176 could be Wave 1/A. Further, the drop towards 0.5900/10 could be Wave 2/B and the rally towards 0.6600 could be Wave 3/C respectively.
Alternately, NZDUSD might have completed 5 waves between 0.5470 and 0.6600. Either way, a corrective drop remains high probability before resuming rally. We need to see a drop towards 0.6375 initial support, to confirm that the correction is on the way.
At the moment, prices remain clearly into the buy zone of the support trend line drawn since 0.5470 lows. A break below the support trend line will add further confidence towards a bearish view for the coming weeks.
We favour the former count, which suggests that a meaningful boundary (rally) has been carved between 0.5470 and 0.6600 respectively. A corrective drop (3 waves, A-B-C) could soon resume towards 0.5900 levels.
Also note that fibonacci 0.618 retracement of the entire rally is seen around 0.5900 levels. High probability remains for a bullish reversal if prices manage to reach there. Most traders might prepare to sell against 0.6600 for a corrective drop towards 0.5900.
Technical Analysis Team
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