Consolidating off an intraday double bottom

The NZDUSD has continued the tumble that has taken the price from a high on Monday at at 0.7050 to the low today of 0.6880.

Looking at the daily chart, today, the price fell below a trend line that cuts across at 0.6910. The prior April low (from April 12th) was broken on the move lower as well as the March 2017 low at 0.6889. The pair made new year lows and has the December low at 0.6861 as the next downside target. A move below it and we start to talk in terms of the pair trading at 10 month lows.

Drilling to the hourly chart, the week started with the pair testing the topside trend line (at red circle 3 and 4). That held and started the risk off trade.

  • The 100 and 200 hour MA and trend line were broken
  • The 50% was next and it too was broken
  • There was a battle around the 61.8% but it too was broken.
  • Today the pair has just tumbled in a more fast and furious run lower.

What now?

Drilling further into the 5- minute chart, you can see the run to the downside today. IN the Asian session the price stalled against the 200 bar MA (green line). After a number of tests, the buyers gave up. The sellers took control, and the pair has been marching lower since....

The corrections of the legs lower have been limited (see yellow areas). Sellers have come in near the 38.2-50% of the legs lower. The current move lower does have a stall with a double bottom at 0.6880. Getting below that level is the next challenge. On the topside (risk now), the 38.2%-50% of the last leg comes in at 0.6892-96. The 100 bar MA is also moving toward that level too. Stay below and the trend continues/the shorts remain in control. Move above and there is some cause for pause (at least the trend might be ready for some oversold consolidation).

The range today is 76 pips. The 22 day average range is 51. So we are a bit extended. Nevertheless, a trend goes farther than traders expect, and the day is trend-like today. So watch the close resistance from the Fibonacci and the 100 bar MA. Stay below is more bearish. Get below and stay below the double bottom and a move toward the December low at 0.6861 becomes the next downside target.