The NZD/USD currency pair is currently in a recovery phase after breaking through a topping pattern neckline. The pair is at a critical juncture where a continuation of the downside trend is likely, but there is also a possibility of a move higher.
The neckline, which is a key level around 0.6100, has been decisively breached, indicating a potential breakdown of the multi-peak topping pattern. The pair fell to a low of 0.6068 on June 26 but quickly bounced back to retest the neckline.
This bounce back, known as a “throwback” in technical terms, is a common occurrence after a breakout from a chart pattern. It is usually a temporary recovery before the price resumes its downward movement towards the breakout target. However, there is a chance that the price could continue to recover instead.
A break below the June 26 low at 0.6068 would confirm a resumption of the downtrend, with a target zone between 0.6028 and 0.6015. A more conservative estimate suggests a potential drop to 0.5965, based on the height of the pattern from the neckline.
On the other hand, a break above the high at 0.6149 would invalidate the breakdown and could signal a continuation of the uptrend instead. The current situation of the NZD/USD pair is uncertain, with potential for both downside and upside movements.