NZDUSD – More Overlapping Harmonics
You’ve seen us talk about harmonic patterns and pitchforks before. In fact you might recall our USDCAD Harmonic from a few days ago. This time, however, it’s time to look at another overlapping harmonic, but at the same time the overlap is even more pronounced that before. We’re also going to look at the major support and resistance going on, and how this could signal a trend shift.
First let us look at the two recently hourly harmonic patterns on this pair.
As you can see there is a harmonic pattern back on March 06-08, and another March 21-26. Remember, we had a weekend in the March 21-26 time frame, so that was a harmonic over three days.
Now let’s go put a pitchfork on the left harmonic pattern.
This is what’s called an “XCD” pitchfork. It starts at the “X” of the harmonic pattern, and the other two points land on the “C” and “D” portion of the harmonic pattern. The XCD pattern doesn’t change from harmonic to harmonic. You will always want to place a pitchfork on these points.
Now let’s draw a pitchfork on the second harmonic.
Same direction of pitchfork, but this is a “XA-BF” style. It means that your two second and third part of the pitchfork are on the “X” and “A” part, while the starting part is going to be determined by the “BF” portion, or “Best Fit.” In this case, we have the pitchfork running on the “A” – “C” line. What happens, though, if we put both pitchforks on at the same time?
Look at that! Notice how they overlap with each other? Let’s zoom in a bit.
If there is one thing that you should notice is how much overlap there is. Notice how the solid lines from the XCD and the dotted lines from the XA-BF overlap, literally, on top of each other.
Major Support & Resistance
As you can see in the images, the price is hovering at about the .6900 area. What you see in the image below is the price of .6800, .6900 and .700 highlighted, with price showing on the daily chart from about March of 2016. Note how many times price reversed in these areas.
There are a number of conclusions we can take from this overlap.
The Forex market very much follows a pattern. We have the same type of pattern forming weeks apart. The same type of harmonic, and the pitchfork following much the same price zones as the previous one.
All of this is also getting close to a reversal zone, one that’s based on a whole number, 69. While 70 would be a much stronger reversal/support zone, it’s possible that we turn around in the next few days/weeks.