On December 30, a significant bearish rejection took place around the level of 0.6840 (daily resistance level) similar to what happened previously on October 23.
Moreover, a daily closure below 0.6750 allowed a quick bearish decline to occur initially towards the level of 0.6500, which was broken to the downside as well.
However, the price levels of 0.6400-0.6350 constituted a significant support zone. Hence, a strong bullish rejection was expressed on January 20 (inverted head and shoulders pattern).
Since January 26, bullish persistence above 0.6500 was mandatory to keep pushing the NZD/USD pair towards higher bullish targets. However, the temporary bearish rejection has been expressed around 0.6550 for almost two weeks, which resulted in the depicted consolidation range.
On January 28, the depicted support level of 0.6400 acted as a prominent key level offering a valid buy entry. A bullish breakout above 0.6550 has been executed earlier today.
Bullish persistence above 0.6550 (depicted recent support) was needed to keep the price moving towards higher bullish targets. The nearest target zone is currently located around 0.6700-0.6750.
Price zone of 0.6700-0.6750 remains a significant resistance zone to be watched for a valid sell entry. Signs of a bearish rejection should be assumed to be a sell signal. S/L should be located above 0.6775.
The material has been provided by InstaForex Company - www.instaforex.com