NZD/USD dropped after failing to take out a dynamic resistance. It was trading at 0.7233 level at the time of writing. The price decreased as the USDX rebounded in the short term.
Its current decline was expected after the last swing higher. The current decline could be over if the USDX (DXY) starts decreasing again amid the US inflation data release. The US data could be crucial for the greenback during the week.
USD maintains a bearish bias despite the current rebound. The US Dollar Index is located deep in the seller's territory, so some poor economic figures could push the index down signaling that the USD may depreciate again.
NZD/USD Temporary Decline!
NZD/USD found resistance at the upper median line (UML) of the ascending pitchfork. Now, it is approaching the weekly pivot (0.7230). Fixation below the pivot point may signal a further decline towards the 50% retracement level.
The bias will be bullish as long as the pair trades above the uptrend line. A minor consolidation above the pivot point or above the 50% level could bring a new long setup. Failing to stabilize below the weekly pivot could signal new bullish momentum.
Outlook!
The bias is bullish, so we could still search for long opportunities. The decline could end around the weekly pivot or on the 50% retracement level. A bullish pattern on these downside obstacles could bring a new long entry.
Selling will be possible only if the rate drops and stabilizes below the uptrend line. The 61.8% and the upper median line (UML) could be used as upside targets. Only a valid breakout above the upper median line (UML) confirms larger growth.
The material has been provided by InstaForex Company - www.instaforex.com