Source: Forex Analysis
The NZD/USD pair had been trapped between the price levels of 0.7170 and 0.7350 until the bearish breakdown of 0.7200 occurred on April 23.
Breakdown of 0.7220-0.7170 (neckline zone) was needed to confirm the depicted reversal pattern. Bearish target levels around 0.7050 and 0.7000 have been achieved already.
The price level of 0.7050 was considered a key-level for the NZD/USD bears That’s why bearish persistence below 0.7050 allowed further bearish decline to occur towards the price levels around 0.6800.
As anticipated, the recent bullish pullback towards the price level of 0.7050 (Broken Demand-Level) offered a good opportunity for a valid SELL entry.
The quick bearish decline took place towards 0.6800 where a false bearish breakdown occurred. This allowed temporary bearish movement to occur towards 0.6680. However, the pair failed to maintain enough bearish momentum.
On July 7, recent bullish rejection pushed the NZD/USD pair above 0.6820 again. This was followed by another bearish breakout below 0.6750 which took place earlier on Wednesday.
Currently, the price zone 0.6750-0.6800 constitutes a demand zone to be defended by the NZD/USD bulls. Potential bullish targets would be located around 0.6900-0.6980.
Please be cautious if the current bearish decline extends below 0.6680 as this invalidates the previous bullish scenario.
The material has been provided by InstaForex Company – www.instaforex.com