NZD/USD has turned to the downside due to the USDX rally. The price action has printed a potential Double Top pattern, so you should be ready to sell it. The pair has reached a new low at 0.6589 level today after erasing the early morning gains generated by RBNZ.
As you already know, RBNZ maintained its Official Cash Rate steady at 0.25% in today's meeting. It remains to see how NZD/USD will react after the United States Flash Manufacturing PMI and Flash Services PMI indicators will be released.
NZD/USD has escaped from a major up channel, it has come back higher to retest the broken uptrend line signaling a potential drop. The most recent failure to retest the uptrend line suggested strong sellers.
The price action has developed a Double Top pattern, but we still need confirmation before going short. S2 (0.6592) and 0.6580 are seen as critical support levels acting as a neckline, a valid breakdown through these levels validates the pattern and suggests selling.
- NZD/USD Trading Tips
A valid breakdown below 0.6580 suggests selling with a potential downside target at 0.6393 static support. NZD/USD could return higher and resume the sideways movement between 0.6601 and 0.6788 levels if the downside breakout will be invalidated by a bullish engulfing or by any other reversal pattern printed on the 0.6601 - 0.6580 area.
