DanV
Short

NZDUSD - FACES FURTHER WEAKNESS AHEAD

FX:NZDUSD   New Zealand Dollar/U.S. Dollar
In my last published chart of NZDUSD             under the title "Could Kiwi Run or Fly" almost 3 months a go, what appeared to potential falling wedge in fact turned out to be a connector wave X and which broke down with price accelerating to the downside and USD gathering momentum to the upside.

In that post further weakness was not ruled out as at least a retracement was anticipated which did not materialise.

In fact since then price appear to have formed double bottom leading anticipation that we might have ended the bearish cycle.

I would have no problem with that, however looking at the bounce from the last low of 11th March, it appears that wave A is a zigzag , ie 3 swings rather than 5 (normally a sign of corrective move), which is then followed by potentially rising wedge , similar to several USD pair on H4 time frame. This rising wedge ( Ending Diagonal ) also suggests that the corrective move to the upside could have ended.

Likewise DXY             appears to be forming corrective move to rather than evidence of reversal. If correct then further weakness for Kiwi lies a head.

Though there are many who have switched to bullish side saying that double bottom marks the end of bearish cycle.

Technicals:

1. The bounce of the last low is abc             zgzag with wave c being and ending diagonal rising wedge .
2. overall still in down trending channel and bumping against previous support which now could turn into resistance. So far the price seems to have rejected higher prices.
3. Next potential support could be at 50% retracement of the 2009             low to 2011 high is 0.69 (if the 0.7180 zone of double bottom fails to hold).
4. Potential low around 0.69 could be supported by several fib confluence of both retracement and extension.
5. Oh H4 - the MACD has just formed a bearish cross and RSI failing at overbought zone.
6. Weekly RSI still below 50 and could fail to breach it.

See weakly chart for larger picture

Conclusion:

Any Bulls should not give too much room to their long positions as this is a high risk trade.

Traders should see what confirmation they require to consider possible short trade.

Observe the price as it moves to 0.72 in order to get clues about future expectation namely if the previous low would hold and form triple bottom or head to lower zone around 0.69.

As, always please do your own analysis for your requirement. Select to follow me and the charts for notification of any updates. If you like the analysis show this by thumbs up and constructive comments or alternative ideas for all to learn from.

Thanks for taking the time to view my analysis.

DanV
danv-charting.com
http://www.danv-charting.com
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In case any have missed the updated chart earlier today here is the link
NZDUSD - FACES FURTHER WEAKNESS AHEAD - UPDATE
Reply
The rising wedge might not be complete yet and could spike into 0.77 or just above. Here is the updated chart
snapshot
Reply
Well both eurusd and gbpusd are not falling today it seems. I give it one more day.
Reply
DanV MOD IvanLabrie
Agreed.
Reply
We had the wedge completion and price fell as expected, but the decline seems complex, don't you think?
Reply
DanV MOD IvanLabrie
Yes, it is not what we expected. So may be a complex retracement with another attempt to retest the high could follow. This is what I mean
snapshot
Reply
Question: can this wedge up be a leading diagonal W1/A in a new move up?
I'm bearish until proven wrong, got a BE stop position running, but not convinced with this drop.
Reply
DanV MOD IvanLabrie
It is unlikely, because we have wave a as zigzag, so wave c would have to have 5 waves as ending diagonal. So if we are to get new retest of the high that would make it possibly expanding diagonal. Similarly, whilst NU is not part of the DXY yet DXY has one more drive up left to conclude the current bullish cycle, that would suggest some weakness for NU.
Reply
Indeed, that was take...DXY leg up pending.
We'll see, I'll let the short run and scale in if I see impulsive behavior (on W2).
Reply
IvanLabrie PRO IvanLabrie
*my take
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