The idea that NZDUSD could weaken over the coming weeks is real.
If you saw my forecast from two weeks ago, you know why, at least from a technical perspective.
The rising wedge on the daily time frame hints at the potential for a pullback.
However, the higher time frames suggest any weakness may be temporary.
Notice how the NZDUSD is holding well above its multi-year trend line following the March false break.
As long as the New Zealand dollar is above that level near 0.6400 on the higher time frames, I can’t get too bearish.
Furthermore, any pullback here could introduce a new bullish structure.
The weekly chart above illustrates how a pullback to 0.6500 or even 0.6400 may carve the right shoulder of a massive inverse head and shoulders.
Of course, that doesn’t mean it will happen.
But if it does, this pattern is worth keeping a close eye on as it implies a 1,300 pip rally if buyers can clear 0.6750.
That hinges on a rotation lower first, though.
If NZDUSD continues to push higher and doesn’t respect the rising wedge in the chart below, then the inverse head and shoulders may not play out.
In summary, any weakness from NZDUSD toward 0.6500 or 0.6400 may be temporary, given what I see on the higher time frames.