In today's technical analysis, we focus on the New Zealand dollar to American dollar pair, which is showing strong bullish momentum amid continued weakness in the U.S. dollar. The American dollar has been on the back foot across the board recently, and this decline is especially evident on NZD/USD, which is now trading at long-term highs.
The technical picture supports the bullish sentiment. Most notably, the pair recently broke above a key horizontal resistance zone marked in yellow around the 0.6080 level. This resistance held firm throughout June but gave way yesterday. In a textbook move often referred to as the "bread and butter" of price action trading, the broken resistance was tested overnight and confirmed as new support. The bounce off this zone triggered a strong upward reaction, reaffirming the bullish narrative.
Currently, the price is confronting a red dynamic resistance line — the last key barrier standing in the way of a full confirmation of a long-term bullish breakout. A clean break and close above this red resistance would solidify the buy signal and open the path to higher levels.
However, traders should be cautious. A reversal that pushes the price back below the yellow horizontal support and through the rising black trendline would invalidate the breakout and signal a possible bull trap. In that case, the failed breakout could swiftly turn into a bearish move, triggering a strong correction to the downside.
So far, the momentum and technical structure suggest buyers are in control, but the next few daily candles will be decisive.