Bottom line: NZDUSD bullish structure is expected to remain intact until prices stay above 0.5470 levels. Bulls are poised to push prices through 0.6760 mark which is immediate price resistance.
Technical Analysis:
NZDUSD bulls have managed to produce an engulfing bullish candlestick pattern on the weekly chart, after printing lows at 0.5470 levels on March 19, 2020. This could be indicating a potential trend reversal lasting for several weeks as traders might be inclined to build long positions.
Immediate price resistance is seen at 0.6760 levels, the December 31, 2019 high, and bulls would be targeting to push NZDUSD higher. This would also be a confirmation that bulls are going to remain in control going forward.
Most traders might be preparing to initiate fresh long positions around current levels (0.5950) with a protective stop below 0.5470 respectively. As discussed above, initial price targets would remain above 0.6760 mark to register themselves.
Unlike the Aussie Dollar, the Kiwi has managed well to hold above its March 2009 support at 0.4896 levels. This could be an indication that the entire drop between 0.8842 and 0.5470 could be corrective and has managed to retrace towards fibonacci 78.6% levels. It is quite possible that bulls may resume a long term trend pushing NZDUSD higher above 0.8842 levels in the next several months.
Alternately, we can at least expect a 3 wave corrective rally from 0.5470 lows, towards the fibonacci 0.618 retracement of the above drop. In this case, NZDUSD might reach around 0.7550 levels before hitting resistance and turning lower again. In either case, a high probable trade direction might be on the north side against 0.5470 levels.
Furthermore, the trend line support from November 2000 has been marginally breached and prices have entered the sell zone for now. A rally towards 0.6760 could probably test the backside of the trend line which is resistance now.
Overall, NZDUSD bulls are expected to remain poised to push prices towards 0.6760 levels at least. Would be interesting to see how price action shapes around 0.6760.
Prepared by
Harsh Japee, Technical Analyst.
NZDUSD Chart
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