Technical outlook:
A 4-Hour chart view has been presented with the most probable wave counts. The drop from 1.1300 levels on December 08, 2016 through 1.0350 can still be considered as wave 1, within 5 waves drop lower. Since then, a complex corrective wave structure has unfolded which is simplified here as an expanded flat A-B-C until 1.0829 level highs formed last week, This can be safely labeled as wave 2 as shown here. The drop from 1.0829 is currently unfolding into a potential impulse (5 waves), which would confirm that the next big move is indeed lower towards parity levels.
Please note that the pair has broken below the trendline support since Jan 2017 lows. This is indeed the first step of the bears regaining control. The next step that would instill further confidence lower will be a break of 1.0625 support. A meaningful resistance is now at 1.0829 level and the pair is expected to continue drifting lower till it stays below that. For the first time in a month the prices are trading clearly into the sell zone and any intraday rally should be considered as opportunity to go short.
Trading plan:
Selling on rallies should be considered as favored strategy for now. If you are already short, please consider booking some profits at 1.0625 level. If you are looking for trading fresh, look for intraday rallies after a break of 1.0635 level to enter fresh positions. Risk is at 1.0829 level, while potential targets are 1.0500, 1.0300 and lower.
Sell on rallies through 1.0700 to 1.0760 levels, stop above 1.0830 and target 1.0500, 1.0300 and lower.
Fundamental outlook:
The US Dollar is expected to remain strong and is possibly into its final leg rally. Today's fundamental data will be released during the New York Session:
1. US Crude Oil Inventories. (Expected impact is minor).
2. Reserve Bank of New Zealand Rate Decision (No change, 1.75%).
Good luck!
The material has been provided by InstaForex Company - www.instaforex.com