NZD/USD Bears Aim at 144 EMA & 0.70 Support on Daily Chart

The NZD/USD is showing a critical bearish breakout. Is this a major reversal or just a simple pullback? Let’s start with the daily chart.

Price Charts and Technical Analysis

The NZD/USD completed 5 bullish waves (pink/purple). The divergence pattern (purple line) and the break below the 21 ema zone confirms the trend change. Let’s review:

1. The main target for a divergence pattern is the 144 ema zone (dark blue MA).
2. There is also a 23.6% Fibonacci level located at the 144 ema zone.
3. The breakout below the 21 ema and support lines (dotted green) confirms the bearish outlook.
4. A bearish continuation (orange arrows) is expected towards the first target zone. An extension is possible to the 38.2% Fib but a bullish bounce is more likely at 0.700.
5. The bearish swing could complete a wave A (purple).
6. A bullish bounce should create a bullish ABC up within wave B (purple).
7. A bearish 5 wave decline could take place in wave C (purple) before a new uptrend emerges (blue arrow).

On the 1 hour chart, a wave 5 (grey) in wave 5 (pink) could complete the wave A (purple) at the round 0.700 level.

1. Price could move up again within wave 4 (orange) and find resistance at the shallow Fib levels.
2. A bearish breakout could aim immediately at the Wizz 7 target and the -27.2% Fibonacci level.
3. This could complete a wave 5 (orange) in wave 3 (grey).
4. A bear flag pattern could emerge in wave 4 (grey).
5. One more lower low is expected to complete wave 5 (grey) of wave 5 (pink).

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter.

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