Remember the inverted head and shoulders pattern that appeared on the NZD/USD last week?
The duo appears to have already broken through the neckline and is now doing a fast retest.
Zooming in to the hourly time scale reveals that the price is falling back to the 38.2% Fib, which is also the location of the last resistance zone at the.6230 level.
This may strengthen its effectiveness as a floor because it is situated close to the 100 SMA dynamic inflection point.
Although Stochastic has considerable capacity to go south, indicating that support levels are more likely to hold than to break, the correction may continue until oversold conditions are fulfilled because the 100 SMA is above the 200 SMA.
As a result, a further retracement may occur, possibly reaching the 200 SMA or the 61.8% level around the.6200 significant psychological support level at.6210 or the 50% Fib at.6210.
If any of them are successful in containing losses, NZD/USD may resume its ascent to the swing high at.6283 or continue to rise toward the.6300 level.
Remember to look at our economic calendar for forthcoming occasions that might affect the markets.
