NZD/USD breaks crucial support
|Asian sessions are usually quiet on the Forex market, volatility is lower and there are no strong, directional movements. The first day of July was different though. The price moved and it moved a lot. Interestingly, it went against what was happening during the end of the European and American session but it was in line with the mid-term trends.
In today’s piece, NZDUSD, where overnight the price managed to break an absolutely crucial horizontal support, which triggered a great sell signal. Let me explain the situation from the very beginning: NZDUSD had been in a downtrend for quite some time, but most recently, it managed to establish a concrete support on the psychological barrier of 0.62.
This support worked in the middle of May and June and also yesterday, until sellers decided it was enough and broke it with a nice bearish candle. Also, in the last two weeks, the price created a nice pennant (black lines), which ended with a breakout to the downside and that could have been a hint for us regarding the direction of the next movement…and it was.
As long as we stay below the 0.62 resistance, we do have a very strong sell signal. The price climbing back above that resistance would mean a false breakout and would be a great signal to buy. But for now, this scenario is less likely to happen.
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