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The NZDUSD sold off sharply after testing the 0.6790 resistance level for the second time on September 18th.
But the selloff wasn’t too surprising given the rising wedge that had formed.
I mentioned this structure on September 14th.
I’ve also discussed the multi-year structure at length in recent months.
Notice how NZDUSD is holding above the top of this triangle pattern following the false break earlier in the year.
Note that the top of that structure could be as low as 0.6400.
However, as you can see from the daily chart below, NZDUSD has carved an upward sloping flag pattern.
An ascending flag within an uptrend like this hints at weakness.
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Sure enough, sellers took NZDUSD below channel support on September 23rd.
That brings us to today’s topic.
As things stand today, NZDUSD buyers face a critical test at 0.6600.
Not only is that a key horizontal level, but it’s also the bottom of the upward sloping flag that extends from the late June lows.
The question now is whether or not buyers can close NZDUSD back above 0.6600.
If they can, it would suggest that the recent breakdown was a false move.
It would also re-expose 0.6790.
On the other hand, if NZDUSD carves a bearish candlestick pattern from the 0.6600 area, it would hint at another leg lower for the pair.