Black line- neckline resistance
Red lines- Head and shoulders pattern
NZDUSD is trading around 0.6240 after bouncing from recent low at 0.6131. In the 4 hour chart we observe that the recent bounce was part of a right hand shoulder of a bigger inverted head and shoulders pattern. Price has now reached the neckline resistance of the pattern. For this bullish pattern to be activated we need to see a break above the neckline resistance. This neckline resistance level has so far been tested 5 times. Current price action confirms the importance of this resistance. The bullish pattern gets cancelled if price breaks below the right hand shoulder low of 0.6131. If resistance is broken, our target will be at 0.6440.