I Expect A NZD/USD Rally

At the end of the trading week the pair was in the zone around 0.6780 – 0.67220 and the Friday session closed at 0.6757.

0.68 – 0.67 is historical for the pair as one can see on the monthly time frame and I think that without a little deeper correction the pair would have difficulty breaking out below it.

At the beginning of next week I expect the pair to test the last low in the zone around 0.6700 – 0.6685 and to begin a rally, the first target of which should be 0.6800 – 0.6820, I think.

If the pair breaks out above 0.6800 – 0.6820 we could expect a move north to 0.6900 – 0.6920.

The alternative scenario is for a depreciation to 0.6400 – 0.6200.

I Expect A Short Term NZD/USD Depreciation Toward The Support

NZD/USD reached the resistance zone at 0.6990 – 0.7020 and formed two spinning top bars on the D1 time frame at that level. The first one is bullish, the second is bearish, but their bodies overlap perfectly.

Such a bar formation is a good signal for a reversal from a bullish into bearish movement. At the beginning of next week I expect a depreciation of the pair to 0.6950 and a test of the support at 0.6850.

There are two scenarios that may follow:

A continuation of the depreciation to 0.6750 – 0.6700 or a rally toward the resistance at 0.7100 – 0.7150.

On the W1 time frame the pair is at a strong support and that is while I think the second scenario is more probable.

Which scenario is more valid will become clear from the bars that close at the test of the support.

I Expect A NZD/USD Rally

On the W1 and the Daily time frame the pair reached a local support at 0.6850 and after breaking out above the trend channel that it formed from 1st May 2018 to 15th May 2018 (on the H4 time frame, marked in red) it began an movement to the upside.

I expect the pair will test the support at 0.6850 once more after which it may begin a move north to 0.7050 – 0.7060 (which is 38.2% Fibo of the last depreciation from 0.73947 to 0.68506).

To the upside after the resistance at 0.7950 – 0.7060 follows the strong resistance at 61.8% Fibo in the zone around 0.7150 – 0.7170.

To the downside the next strong support is around 0.6800 – 0.6780.

NZD/USD Is Forming A Barbed Wire Pattern On The W1 Time Frame

This is a rather tricky formation. According to its definition, it has at least three bars with long upper and lower shadows and overlapping bodies. That is exactly what we can see on the W1 time frame.

That formation means only one thing: a range, consolidation and the possibility for a breakout in either direction.

In this case the first target to the upside is 0.7500 followed by 0.7550.

In case there is a breakout below the strong support around 0.7150 the target to the downside would be the last local low around 0.6800 – 0.6780.

In my opinion both scenarios are almost equally probable, the drop to 0.6780 being slightly more so.

The NZD/USD Trend Is Bearish And With Targets 0.7200 and 0.7100

After the double top on the W1 time frame where the difference between the bars was just 1 tick (0.74369 – 0.7468) the NZD/USD pair began depreciating which will lead it, I think, toward the W1 support around 0.7100.

On the D1 time frame we could expect a test of the first stronger support around 0.7200.

On the H4 time frame the pair is forming a trend channel with height at the base around 90 pips and the pair has already broken out below it, so we could expect a depreciation toward 0.7205 – 0.7200 which coincides with the prognosis on the larger time frame.

However, it is possible for the pair to return to 0.7300 before that depreciation for a test of the support trend line of the channel it broke out below.

NZD/USD Fulfilled My Expectations For A Rally

Just as I thought in my last NZD/USD assessment the pair reached 0.6780 and started rallying from that level, reaching the other level I had written about at 0.70(33)>>>

What can we expect from now on from this pair?

The support on the monthly time frame at 0.6780 is still valid and considering the approaching Winter holidays and the slowing down of the market I doubt there will be a breakout in the following days.

On the W1 and D1 time frame the pair, however, reached a strong resistance at 0.7033. On the D1 time frame it is especially obvious that after one spinning top bar and two falling star bars the pair cannot continue rallying and it will renew its move to the downside. The support levels are at 0.6900 and 0.6800 and we could see a test of the last low at 0.6780.

Depending on how the December monthly bar will close we could make a prognosis whether a strong rally or a drop will follow.

NZD/USD May Keep Depreciating But It Won’t Be For Long

During the last few days of the market week the NZD/USD pair was falling sharply – for one day alone it dropped with 96 pips.

On the D1 time frame we can see an inverted bullish hammer at the bottom of the downward movement, which is a potential signal for a rally. We should not forget that the D1 bar has not closed yet and it will do so at the beginning of the new trading week on Sunday to Monday night.

On the weekly and H4 time frame there is a signal for a drop while the D1 support is around 0.6800 – 0.6780. Should the pair break out below it there is a potential for a depreciation to 0.6700, where there is a strong support on the monthly time frame. There we should observe the pair very carefully, but in my opinion there won’t be a breakout and we will probably witness a renewal of the rally to 0.6900 – 0.7000.

There Could Be A Drop And A Test Of the NZD/USD Local Low

It appears the NZD/USD is about to form a flag or a pennant on the monthly time frame.
 

This is the largest possible time frame and the potential development of such a figure will take months, but its possible target is worth the wait.

 On the W1 time frame there is another fully developed flag and the pair with a breakout below the support trend line. If the pair reaches the limit of that flag we could see a drop to around 0.6250-0.6220 which means a test of the local low from August – September 2015.

The other possible target is 1500 pips away from the breakout level.

The third long term scenario is another rally after the possible drop and test of the local low, which would lead to the development of the above mentioned flag or pennant figure.