NZDUSD – Is a bull trap looming over the pair?
A larger corrective downtrend started from 0.8845 (Aug’11 high) appears to be unfolding in a multimonth triangle pattern. The corrective recovery from 0.7455 (June low) has the potential to test the 0.8240/0.8320 resistance ahead of 0.8475. A break below 0.7990/0.7800 would renew the bear trend toward 0.7455 in a wave (E) before attempting medium term trend reversal. A break of 0.7455/0.7370 however would deepen the correction.
The pair has failed at a Fib. cluster at 0.8225 (convergence of two trendline resistances is also there). A break of 0.8065/0.7990 would confirm a medium term top and targets 0.7915/0.7805 initially. A move back above 0.8225 would extend the uptrend toward the tough 0.8320/0.8475 resistance where we expect the pair to fail again.
