The NZD/USD plunges and resumes the corrective phase, is trading near the 0.7420 level, but could slip much lower because is very heavy. Is pressured after a false breakout above a strong confluence area.

Price is seeking for strong support at this moment, remains to see where will find one because we have some important support levels. NZD/USD drops like a rock even if the dollar index is trading in the red today and could drop deeper in the upcoming days.

USDX could approach the 92.80 previous low, is still expected to approach and reach the 92.49 static support in the upcoming days, where he could find support again. I’ve said in the last weeks that the dollar index is bearish, right now we don’t have any reversal sign because is trapped below some important resistance levels.

The Kiwi was punished by the poor New Zealand’s data, the Employment Change dropped by 0.2% in Q2, even if the traders have expected to see a 0.7% growth, while the Labor Cost Index increased by 0.4%, less versus the 0.5% estimate, the indicator remains steady at 0.4%. The Unemployment Rate decreased to 4.8%, from 4.9%, but the Kiwi wasn’t impressed.

Is trading in the red and is expected to hit the next downside obstacle from 0.7402 static support. Will drop much deeper if the dollar index will have enough energy to climb much above the 93.00 psychological level. Support can be found at the 0.7401 level and much lower at the fourth warning line (wl4) of the former ascending pitchfork. I’ve said in the previous weeks that the perspective is bullish as long as the rate is located above the wl4.

The current drop is natural after the false breakout above the third warning line (wl3) of the ascending pitchfork with the third warning line (WL3) of the descending pitchfork. A further increase will be confirmed only after a valid breakout above the WL3, while a larger drop will appear if the price will take out the support from the warning line (wl4).