It’s official, the NZDUSD breakdown in March was a false move.
I talked about this possibility several times in June.
In fact, I was waiting for June to close to determine whether the 0.6200 area would hold as resistance on a monthly closing basis.
But before I go too far, it’s essential to understand why the 0.6200 area was (and still is) so significant for the NZDUSD.
0.6200 is the location of a trend line that extends from the pair’s year to date low.
We can see that the New Zealand dollar closed below that area in March.
The next two months also closed below 06200.
However, June’s close back inside the wedge pattern above suggests that the recent selloff was a false break.
As I’ve mentioned before, a false break to one side of a pattern often triggers a move in the opposite direction.
In other words, NZDUSD looks like it wants to move even higher.
As of this writing, 0.6380 is serving as support.
Key resistance, on the other hand, comes in via the short-term trend line just below 0.6500.
But if NZDUSD is going to move higher as it did in late May and early June, buyers need to take out the multi-year trend line resistance near 0.6550.
That’s the most significant resistance level as of now.
In summary, the recent false break suggests a higher NZDUSD, but buyers need to clear 0.6500 and 0.6550 to open the door to 0.6750.
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