NZD/USD dropped and resumed the bearish momentum and could stabilize in the red territory. Has squeezed a little in the last hours, but only because the USDX has decreased a little as well. The dollar index seems undecided on the Daily chart, is moving sideways on the short term, so remains to see if this will be a distribution or an accumulation movement.

The pair is trading in the red and looks poised to resume the downside movement. Right now we may see a minor distribution movement before will resume the corrective phase.

I’ve added the USDX to show you what’s happening with the USD and what re the perspectives. Has changed little and continues to stay above the 93.00 psychological level, technically could climb much higher after the breakout above the outside sliding line (sl) of the minor descending pitchfork.  You can see that is still trapped under the 93.81 major static resistance and below the lower median line (ml) of the major descending pitchfork.

A valid breakout above the lower median line (lml) will signal a larger rebound, could still come down to test and retest the 250% Fibonacci line (ascending dotted line) before will start another bullish momentum.

Price has plunged much below the 38.2% retracement level in the yesterday’s session, has ignored also the minor red uptrend line. NZD/USD has developed a Head and Shoulders pattern and now the rate has broken below the Neckline (red line), a retest will confirm the pattern and a potential drop of more than 300 pips.

Support can be found at the 50% retracement level, but the next important downside target will be at the fifth warning line (wl5) of the former ascending pitchfork.  Could be attracted also by the third warning line (WL3) of the descending pitchfork if the USDX will climb much higher on the short term. Only a  failure to drop below the 50% retracement level will signal a potential rebound. Technically should drop further, but the fundamental factors could take the lead tomorrow.