FX.co ★ NZD/USD Head & Shoulders Indicates Correction!

NZD/USD is trading in the red and is on the verge to lose the uptrend support. It's traded at 0.7181 above the 0.7152 static and critical support. Dropping through this downside obstacle could activate a corrective phase.

The greenback grows after President-Elect Biden unveiled a $1.9T rescue package to support the US economy. USD could appreciate versus its rivals in the short term if today's data will come in line with expectations or better.

The Retail Sales could register a 0.0% growth in December, while the Core Retail Sales indicator could remain in the negative territory at -0.1%. Moreover, the Prelim UoM Consumer Sentiment, Business Inventories, Capacity Utilization Rate, Core PPI, and the PPI will bring high volatility as well in the US session.

NZD/USD Downside Breakout!

NZD/USD has slipped from the up channel's body after a new rejection from the Pivot Point (0.7233) level. I've told you in a previous analysis that the pair will develop a corrective phase if it drops and stabilizes below the S1 (1.7151) and under the median line (ML) of the descending pitchfork.

NZD/USD has printed a Head and Shoulders reversal pattern which needs to be confirmed before considering this structure as a selling opportunity. As you can see, the price has failed to come back towards the upper median line (UML) of the descending pitchfork signaling high selling pressure and a potential drop at least till the median line (ML).

Forecast & Tips!

The H&S pattern will be validated by a drop and stabilization under the median line (ML). Also from there, a corrective phase will be activated. Sell a valid breakdown through the median line (ML) and use the lower median line (LML) as an important downside target.

On the other hand, another false breakdown through the uptrend line followed by a bullish closure above the former high, 1.7249, signals further growth.