NZD/USD rebounded in the short term after dropping as much as 0.6943 level. It is trading at 0.6978 and it may drop further if the US Dollar Index resumes its upwards movement. The Dollar Index confirmed a bullish reversal, so it is still expected to jump higher.
The pair increased a little after a strong sell-off but the bias remains bearish. NZD/USD is expected to register a broader drop after validating a major Head & Shoulders pattern. The US is to release high-impact data during the week. In line with expectations figures or better could support USD's appreciation.
NZD/USD Deeper Drop Incoming!
NZD/USD plunged under the descending pitchfork's lower median line (LML) and under the 50% retracement level. Now has increased a little trying to retest these levels before resuming its downside movement.
Stabilizing under 0.7000 could bring a new short opportunity. The bearish bias remains intact as long as it stays under the red downtrend line. NZD/USD may approach the 0.68 level after the H&S reversal pattern was activated.
Conclusion & Tips!
Search for short opportunities as long as NZD/USD is located under the red downtrend line. A false breakout with great separation above the lower median line (LML) or through the 0.7000 is seen as a selling signal.
Also, a major bearish engulfing on 0.7 or on the lower median line (LML) represents a short opportunity. A new lower low, bearish closure under 0.6943, validates a further drop towards 0.68 psychological level.
