The New Zealand dollar currency has started to recover higher against the US dollar after crashing towards the 0.5470 support level last week.
NZD/USD technical analysis shows that the pair could now test towards the 0.6200 resistance level after reaching its initial downside target.
NZD/USD medium-term price trend
The NZD/USD pair has started to recover higher after the Federal Reserve’s bond buying programme caused the greenback to weaken against most major currencies.
NZD/USD technical analysis shows that the pair could start to recover higher after a bearish head-and-shoulders pattern played out to its initial downside target, just below the 0.5500 level.
With the bearish medium-term target achieved, the NZD/USD pair could move towards the neckline of the bearish pattern, around the 0.6200 level.
Failure to move above neckline resistance could see the pair trading in a lower price range between the 0.6200 and 0.5700 levels over the medium-term.
If bulls can gain traction above the neckline of the pattern, a rally towards the 0.6500 to 0.6600 technical area appears possible.
NZD/USD short-term price trend
NZD/USD analysis shows that the pair has a short-term bearish bias while the price trades below the 0.6170 level.
The 30-minute time frame currently shows that a bullish reversal pattern with over 700 points of upside potential will form if price reaches the 0.6200 level.
In addition, the four-hour time frame is also warning that bullish MACD price divergence was created during the recent decline, and remains in play until the 0.6600 technical region.
With this in mind, watch out for a powerful rally in the NZD/USD pair if price starts to trade above the 0.6200 resistance level.
NZD/USD technical summary
NZD/USD analysis highlights that a recovery towards the 0.6200 level could take place. Gains above the 0.6200 level could ignite a large reversal pattern with significant upside potential.