NZDUSD defends yearly lows and undergoes the bullish correction
|It is the time again to write about the NZDUSD as the price made some significant movements that were expected by us in our previous analysis. About the Kiwi we wrote on the 27th of November, when the price was still inside of the tight range. That time, we mentioned:
“All that together is giving us an interesting buy signal. We are not talking about the reversal of the main long-term trend here but at least about the mid-term bullish correction. Positive sentiment will be denied once the price will come back below the orange area [0.682] but currently it is less likely to happen. “
In the last few days, NZDUSD was trading very technically. The price tested the 0.682 support (yellow) and went higher. The breakout of the lower line of the triangle (green) was not significant, especially for sellers and even when it was, it was fake and was actually a strong buy signal. After the price touched the 0.682 support, we had only bullish days on this pair (four so far). During that upswing, we broke the upper line of the triangle, which in the same time played the role of the neckline. Technically that is a bullish trigger.
The buy signal is on then, the iH&S pattern is active and the positive sentiment towards the NZD is present. That being said, we should look for the potential target of the current upswing. In my opinion the price should aim the blue area, which is a strong resistance created by the combination of the October's support and the long-term (since 2015) up trendline, which was broken few weeks ago. To this area we do have 110 pips, which makes it an interesting mid-term trading opportunity.
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