NZD/USD Price Analysis: Kiwi Retests Crucial Neckline Support, Reversal or Continuation?
Unusual Double Throwback: A Sign of Weakening Downside Pressure?
After initially breaking below the neckline on June 26th, the NZD/USD quickly recovered and retested the level the following day. Despite another dip on June 28th, the pair has once again bounced back, suggesting that downside momentum might be waning.
This double throwback phenomenon is relatively rare and could indicate a potential false breakout, raising the possibility of a bullish reversal above the neckline. However, the recent formation of a bearish Shooting Star candlestick pattern on the 4-hour chart hints at a potential continuation of the downtrend.
Key Levels to Watch:
- Neckline Support: The neckline of the topping pattern near 0.6070 remains a crucial level to watch. A decisive break below this support could trigger further declines towards 0.6028 (bottom of the April 10th price gap) and 0.6015 (Fibonacci 0.618 extension).
- Resistance: A close above the 0.6108 highs would challenge the bearish outlook and signal a potential recovery. A move above 0.6149 (June 13th and 14th highs) would invalidate the topping pattern and likely initiate a new short-term uptrend.
Market Sentiment and Factors to Watch:
The NZD/USD pair's recent price action reflects a struggle between bulls and bears. The weakening US Dollar and improving risk sentiment have provided some support for the Kiwi, while concerns about New Zealand's economic outlook and the potential for further Fed rate hikes are weighing on the currency. Traders are closely watching for any fundamental developments or technical signals that could tilt the balance in either direction.