Bullish persistence above 0.6550 (the depicted support) was necessary to keep the price moving towards higher bullish targets.
In February and March, signs of bearish rejection (triple-top reversal pattern) were expressed around the price level of 0.6750 until April when a bullish breakout above 0.6750 and 0.6860 was executed.
Later on May 6, daily candlestick closure below the 0.6850 level enhanced a quick bearish movement towards 0.6750 where bullish rejection was expected to be applied. However, obvious bearish closure below 0.6750 was achieved on May 24.
On May 30, obvious bullish rejection was expressed around the price level of 0.6675 (the lower limit of the depicted channel). That’s why, the recent bullish breakout is taking place above 0.6860.
As long as the NZD/USD pair kept trading above 0.6860, further bullish advance was expected towards the price zone around 0.7400 (upper limit of the depicted channel).
As anticipated, the price zone of 0.7350 – 0.7400 (upper limit of the depicted channel) offered a valid SELL entry. Initial T/P levels should be located at 0.7100, 0.7000, and 0.6900. S/L should be set as a daily candlestick closure above 0.7300.
Confirmation of the depicted Head and Shoulders reversal pattern requires a DAILY candlestick closure below 0.6970 (Neckline). Projection targets extend down to 0.6760 and 0.6690 levels.
On the other hand, the price zone between 0.6760-0.6700 constitutes a support zone to be watched for a possible BUY entry if the current bearish swing extends below 0.7000.
The material has been provided by InstaForex Company – www.instaforex.com