NZD/USD ?Rising Wedge Indicates Bearish Correction ?

Dear Traders,

The NZD/USD continues to grind higher. But momentum is waning and price-action is showing further signs of a potential correction.

This analysis will take a quick look at the most recent price-action of the NZD/USD

Possible Wedge Forming As Ending Structure

The NZD/USD remains bullish, but several factors point towards at least a temporary correction now:

• Confirmed 4hour chart divergence
• distinctly slowing momentum and repeated dips below the 21 EMA
• Price approaching strong historic resistance level at around 0.7375
• Price could be in the process of forming a rising wedge/ending diagonal chart pattern, that would complete Wave 5 of the recent upwards thrust (see chart above). This is not yet confirmed, so watch price for 3-wave zig zags as part of wave 4 and 5. Also note that if price breaks sharply below the 21 EMA of the 4-hour chart, the correction may already go into full swing without tracing out the wedge pattern.
• Invalidation of this analysis would occur if price breaks AND closes above 0.7375, with a strong 1hour or 4 hour bullish candle close. But a quick hit at, or slightly above, 0.7375 with quick bearish reversal could provide further confirmation for the rising wedge scenario.
• Possible targets for a bearish correction could be 0.7200 (modest), 0.7175 – 60 (38.2 fib), and 0.7100 (50% fib).

All the best along your trading journey

Hubert

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