NZDUSD might have carved a meaningful top around 0.6585 levels on June 10, 2020. The currency pair has been drifting sideways since then, and is trading around 0.6523 levels as we prepare to publish this article. Bears are looking poised to push through 0.6250 and 0.6050 levels in the next few weeks.
Let us have a look at probable wave counts here. The rally between 0.6470 and 0.6585 is looking corrective until now. We have labelled as a potential A-B-C on the 4H chart here. Also, with respect to the price action until now, it could be seen as 1, 2 and 3 within a potential impulse.
NZDUSD needs to push through 0.6585 interim resistance to complete an impulse wave that potentially began since 0.5470 mark. Until that happens, high probability remains for turn lower with 0.6585 in place.
The short term wave counts are as follows: The drop between 0.6585 and 0.6381 looks to be in 5 waves, making an impulse wave, labelled as wave I on the chart. Since then, NZDUSD might have carved a corrective wave ii, which might have terminated at 0.6536 today.
Also note that potential wave ii has reached close to the fibonacci 0.786 retracement around 0.6543. High probability remains for a bearish reversal from here, and NZDUSD could be heading towards 0.6250 and 0.6050 in the short term.
Most traders might have initiated fresh short positions around 0.6530/35 mark, with protective stop above 0.6600 levels and projected target towards 0.6230 and lower respectively.
Technical Analysis Team
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