NZDUSD consolidates, forms HnS pattern

23/12/2020

The NZDUSD pair, also known as the kiwi, has been trending lower this week, but it was up half a percent on Wednesday. At the last check, the pair was seen at around 0.7070.

The long-term trend still appears bullish, but the short-term time frame looks like bullish exhaustion. Moreover, it is starting to look like the head and shoulders pattern. 

The neckline of this formation is near 0.7010, and while the pair trades above this support, the outlook still seems bullish. However, a breakdown below this support could trigger many stop losses and send the kiwi lower. 

The full potential of the formation is circa 180 pips, thus targeting the 0.6820 zone. 

However, the right shoulder is only forming. Therefore the pattern is not "ready" yet. 

Alternatively, if the kiwi starts rallying, which is possible, the intraday resistance could be at 0.71, afterward at around 0.7120, and then at the current cycle highs of 0.7160.
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