The currency pair is extending its decline and is almost to reach major static support. The USD continues to drag the pair down despite the USDX's minor correction. NZD/USD has tried to rebound a little, but the bears are very strong and they could send the price back to 0.6268 major support.
The Kiwi received a hit early in the week from the retail sales data. the Retail Sales indicator has increased by 0.7%, down from the 0.8% estimate, while the Core Retail Sales registered only a 0.5% gain, weaker than expectations for a 0.9% increase.
NZD/USD is approaching the 0.6268 static support after the aggressive breakdown below the 61.8% retracement level. The price has failed to retest the inside sliding line (SL) of the descending pitchfork signaling massive selling pressure.
It would be a good idea to see how the price will react near the 0.6268 level. You can notice that NZD/USD was rejected by this downward obstacle in the past. NZD/USD could be attracted by the median line (ML) of the major pitchfork as well.
- Trading Recommendation
The outlook is bearish and the pair is expected to drop further in the upcoming days. It is premature to talk about a potential upside movement as long as we don't have a reversal pattern. We could try to search long opportunities inside the 0.6268 - 0.6203 support area, any reversal pattern could announce a significant bullish movement.
A reversal could appear also if NZD/USD fails to reach the median line (ML) of the descending pitchfork, this scenarios will signal a potential upside movement towards the upper median line (UML). MACD is showing a hidden divergence on the Daily chart, but we need a bullish divergence on H4 or H1 to have a first reversal signal.
NZD/USD has been moving sideways on H4 and H1 charts. Another lower low, a drop below 0.6302 will confirm a further drop on the short term with a target at 0.6268, while a false breakdown from this extended range will signal potential bullish momentum with a target at 0.6355 level.
