Trading idea: Expecting further withdrawal in the NZD / USD to enter long

The NZD / USD (New Zealand dollar – US dollar) had begun a solid recovery at the beginning of October 2019, but the rebound came to an end once the price reached a key resistance close to 0.6725 at the end of December. The attached graph shows that this roof is formed by the confluence of a long-term downward trend line drawn from July 2014 and the Fibonacci retracement of 38.2% of the fall from July 2017 to September 2019.

Once repelled from 0.6725, the pair began a moderate bearish correction that has extended for four consecutive weeks (at the time of this writing). Despite the latest falls, there are reasons to believe that the declines would be coming to an end. This is because the price is a short distance from a support of great relevance close to the psychological level of 0.6500. It is worth noting that in this area a medium term bullish guideline converges and the minimums for May and June 2019.

Considering the location of the price action, an interesting trading idea involves the execution of a long transaction in NZD / USD at 0.6500 (the exchange rate could bounce from that support and resume increases).

Meanwhile, the profit target can be established in the resistance given by the 0.6700 (bearish guideline of July 2014), while the stop loss can be placed at 0.6425, support forged by the minimum of July 2018.

NZD / USD TECHNICAL GRAPH