Key Points:
- Wolfe Wave Completes.
- Crab and Cypher Patterns Complete.
- RSI Oscillator Nears Oversold.
The venerable New Zealand dollar has been one of the star performers over the past few months as the commodity block pair has rallied from a low of 0.6346 to now trade above the 70 cent handle.
Additionally, the past week has been a tough one for the kiwi dollar as it has declined sharply from above the 72 cent handle to its current position. However, despite the rout, the pair is again exhibiting signs that a rally might be just around the corner.
In particular, a cursory review of the three-hour chart exhibits some interesting patterns for the technical analyst that lends itself to the bullish contention. The corrective structure is clearly evident with a Wolfe Wave and requisite target having been completed in the past few days.
Subsequent to that event, the pair declined additionally to also finalise both a crab and cypher pattern and price action is now sitting at the 3.618 crab extension point.
In addition, the RSI Oscillator is also relatively depressed on the same time frame, albeit still slightly within neutral territory. Subsequently, even the oscillators are suggesting that the time has come for a resumption of the bullish trend.
However, price will need to first surmount the hourly resistance zone at 0.7054 before commencing a challenge to the upside target at 0.7172 (50% Fibonacci level on the daily).
This scenario is actually relatively probable given that currently a move below the 70 cent handle is likely to meet with a major support and resistance zone around the 0.6950 mark.
Ultimately, most of the chart patterns are now arguing for a resumption of the bullish trend especially now that the spectre of a negative dairy trade result has passed.
Subsequently, watch for the pair to make a bullish move in the coming session but keep an eye on the US Unemployment Claims and Philly Fed fundamental results lest the trade be invalidated.