NZDUSD is trading at 0.6627 right now and we explore the possibilities of the creation of a head and shoulders pattern. If price turns lower from current levels towards 0.6530 then we could have a right hand shoulder in place.
Red line - support
Blue line - neck line
Black lines - Possible head and shoulders pattern
NZDUSD got rejected at the red rectangle resistance area. As long as price is below 0.6750 the chances favor a pull back towards 0.64 and lower. At current levels of 0.6627 we prefer to turn bearish with a stop at 0.6710 in favor of the scenario that a head and shoulders pattern is being formed. It is important for our bearish scenario to see price turn lower from current levels and break the neck line support at 0.6530 area. If this support level is broken, only then we have confirmation of the head and shoulders pattern and our stop will lower to the highs of the right hand shoulder. Next downside target would be 0.6370.
