NZD/USD is trading in the red at the 0.7066 level and it seems heavy enough to continue to drop in the short term. The most recent upside false breakout indicated exhausted buyers and a potential corrective phase.
The pair should drop if the US Dollar Index will have enough energy to jump higher. The USD was into a corrective phase in the last weeks versus its rivals as the USDX has plunged ahead of tomorrow's FOMC meeting.
As you probably know, the FED is expected to add more stimulus measures to help the US economy to recover after the COVID-19 crisis. Maybe the possible incentive measures are already included in the price movement, so the pair could drop again.
NZD/USD Bulls Seem Exhausted!
NZD/USD has found strong resistance at the 0.71 psychological level, the most recent false breakout signals strong sellers. Now is pressuring the Pivot Point (0.7067) level after registering the second false breakout above the third warning line (wl3).
Still, the decline could be only a temporary one, the rate could grow again if it fails to close and stabilize under 0.7000 psychological level.
Technically, NZD/USD could resume its uptrend only if the rate makes a new higher high, after jumping and closing above the 0.7120 level.
- NZD/USD Trading Conclusion
Personally, I would like to see another false breakout (Pin Bar, Bearish Engulfing), rejection, before going short. Also, a valid breakdown below the S1 (0.7021) suggests selling with a potential short-term downside target at the 0.6913 level.
Buy if NZD/USD closes above the 0.7120 level. A new higher high could lead the rate towards the 0.7240 level.
