The NZD/USD pair had been trapped between the price levels of 0.7170 and 0.7350 until bearish breakdown of 0.7200 occurred on April 23.
The 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 already achieved.
The price level of 0.7050 was considered as 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.
Quick bearish decline took place towards 0.6800 where a false bearish breakdown occurred. This allowed a temporary bearish movement to occur towards 0.6680. However, the pair failed to maintain enough bearish momentum.
Instead, evident signs of bullish rejection pushed the NZD/USD pair above 0.6820 again.
Currently, the price zone of 0.6780-0.6820 constitutes a prominent demand zone to be watched for BUY entries with potential bullish targets around 0.6900-0.6980.
Please be cautious if any breakdown below 0.6750 occurs as this invalidates the previous bullish scenario.
The material has been provided by InstaForex Company – www.instaforex.com