Tight RR Trade - .6593 Key Level

It appears the Kiwi has been building impulsive moves higher followed by corrections lower. From an Elliott Wave perspective, circle wave 3 stopped at the 1.618 extension of the circle wave 1 measurement. This is a common relationship between '3' and '1'.

If this is the case, then the proposed wave '4' should hold above the Nov 19 wave '1' high of .6593. Therefore, that price can be used as a stop loss. Targets lie at .6730 (wave 5 = .382 * wave 1-3) and .6848 (wave 5 = .618* wave 1-3). This yields better than a 1:2 risk to reward ratio.

Sentiment on the Kiwi for the past couple of years has been consistent. I find it interesting how for the past 2 years there have been more buyers in NZDUSD yet price has fallen from nearly .85 to the current .66. Now, the number of long traders has dropped to nearly a 2 year low perhaps signaling a bottom is in or is nearby.

Kiwi's Speculative Sentiment Index currently sits near -1.3...this sentiment zone between -1.3 and -1.8 is the lowest in the past 2 years. Sentiment is a contrarian signal so as it falls, look for bullish price patterns.

Follow real-time sentiment readings HERE.