FX.co ★ NZD/USD: Upside Seems Limited

NZD/USD has rebounded in the short term but this upside movement could be only a temporary one before the quote drops again. Still, a downside scenario needs confirmation. The US services sector further expansion could attract the sellers on NZD/USD as the greenback could take full control.

Technically, the pair was somehow expected to drop deeper after breaking below the major uptrend line. It has developed and confirmed a Double Top pattern as well, but unfortunately, USDX's drop has weakened the USD.

NZD/USD has failed to reach the R1 (0.6679) static resistance in the last attempts signaling a bearish pressure. A larger corrective phase could be validated by a drop and stabilization below the median line (ml) and under 0.6511 former low.

It's hard to believe that the pair will reach fresh new highs, to jump above 0.6788 static resistance before dropping again. NZD/USD moves sideways in the short term, so we have to wait for a valid breakout to confirm direction.

• NZD/USD Trading Tips

Buy a valid breakout above the upper median line (uml) of the descending pitchfork. A potential breakout validates a further growth and a move far beyond 0.68 psychological level.

Another drop below the median line (ml) and under the S1 (0.6562) level signals a deeper drop. A perfect selling opportunity appears if the price drops below 0.6511 and under the 23.6% retracement level.