Few months ago, the NZD/USD pair established a consolidation zone that extended between the price levels of 1.7620 and 1.7870.
On January 20, bears managed to execute a successful breakout below the major DEMAND level at 1.7620. Shortly after, the bears managed to reach a new low around 0.7200 where significant bullish recovery was executed.
Recently, the NZD/USD pair managed to break above 0.7430 (key level). This price level has been providing significant SUPPORT for the pair so far.
Hence, bullish pressure is expected to be applied over the nearest SUPPLY level to meet the NZD/USD pair around 0.7630.
The H4 chart showed an inverted Head and Shoulders pattern that originated off the price level of 0.7200 (the most recent low).
Bullish fixation above the neck-line (the price level of 0.7450) confirmed the reversal pattern.
Estimated bullish projection target for the reversal pattern is located around the price level of 0.7676.
On the other hand, the price level of 0.7630 corresponds to the 61.8% Fibonacci Level as well as the lower limit of the broken consolidation zone depicted on the chart.
Hence, the price zone of 0.7630-0.7670 should be watched for the price action as low-risk SELL entries can be taken at retesting. Stop Loss should be placed above 0.7700.
The material has been provided by InstaForex Company – www.instaforex.com