NZD/USD drops like a rock in the short term validating a major Head & Shoulders reversal pattern. Technically, the pair has developed a reversal pattern after reaching 0.7427 higher high.
Its failure to come back higher towards this level and the new lower low registered today signal that NZD/USD has activated a corrective phase. The pair should drop deeper if the US Dollar Index resumes its upside movement, bullish reversal.
NZD/USD Sell-Off!
NZD/USD completed its right shoulder after failing to stabilize above the descending pitchfork's median line (ML). The sell-off started yesterday continues after ignoring the S1 (0.7111), 0.71, and the H&S neckline.
Technically, the price could turn back in the short term to retest the broken levels before resuming the downside movement, the corrective phase. Closing under the S2 (0.7063) signals further drop towards the next downside target represented by the descending pitchfork's lower median line (LML), or by the 0.7 psychological level.
Trading Tips!
The aggressive breakdown through the neckline and 0.71 represents a selling signal, even if the rate could rebound to retest these levels. A valid breakdown below the lower median line (LML) signals a larger drop towards 0.68.
