The New Zealand dollar has broken sharply to the downside against the US dollar as the greenback firms across the board and traders turn heavily bearish toward antipodean currencies.
NZD/USD analysis indicates that the pair could soon tumble towards the 0.6200 level before the latest decline pauses.
NZD/USD medium-term price trend
The NZD/USD pair has tumbled to a fresh 2020 trading low this week, after sellers recently broke through the 0.6378 technical support barrier.
Antipodean currencies are suffering heavy losses this week, with the US dollar index advances to its highest trading level in over two years.
NZD/USD technical analysis shows that price is likely to test towards the 0.6200 level over the medium-term, now that the 0.6378 support level has been definitively breached.
The daily time frame shows that a large head and shoulders pattern will form if price reaches the 0.6200 level. The size of the bearish pattern indicates that the NZD/USD pair could slide even lower, and towards the 0.5700 level over the medium-term.
Overall, watch out for an upcoming decline towards the 0.6200 level. Minor corrective moves are possible once price reaches the mentioned bearish target.
NZD/USD short-term price trend
NZD/USD technical analysis over the short-term shows that the pair has turned heavily bearish and is trading below all key short-term moving averages.
A large head and shoulders pattern has been triggered across the lower time frames, with the neckline of the pattern located around the 0.6555 level.
The size of the bearish pattern is signaling a coming decline towards the 0.6180 level, which is slightly lower than 2019 trading low, around the 0.6200 level.
Short-term technical indicators are also extremely bearish, with the MACD, RSI, and Momentum indicators all pointing to further losses.
Overall, traders should look to sell any rallies in the NZD/USD, as the short, medium, and long-term trend is heavily bearish.
NZD/USD technical summary
NZD/USD analysis shows that the NZD/USD pair is likely to test towards the worst levels of 2019, around the 0.6200 level. A steeper decline towards the 0.5700 is also possible over the medium-term.