NZD/USD has staged a five-wave rally since the March 19 low at 0.5468. This means a top is nearby and a correction towards at least 0.6490 should be expected in the coming weeks. Short-term, a break below minor support at 0.7006 will confirm the top is in place and a correction is unfolding. The first target to look for is the 38.2% corrective target at 0.6490 but a deeper correction can't be excluded.
To support our assessment that a top is nearby, we see negative divergence from the RSI pointing towards a loss of upside momentum.
R3: 0.7200
R2: 0.7150
R1: 0.7105
Pivot: 0.7068
S1: 0.7044
S2: 0.7006
S3: 0.6960
Trading recommendation:
Long positions should be protected by a stop and reverse to a short position upon a break below 0.7006.
