NZD/USD Is Forming A Flag On The Weekly Time Frame

That flag was a signal for a move to the downside long before the news that came out on the 14th December that FED was hiking the interest rate from 0.50 to 0.75. That gave the USD a push and the pair dropped considerably.

 

 However, the first breakout below the flag happened on 14th November when the pair dropped to the support trendline of the downwards channel (as you can see on the screenshot of the daily time frame). The pair rebounded from it, moved to the upside to test the blue support trendline of the flag it broke below and then dropped right after the news about the interest rate hike.

If we examine the shorter 4H time frame, we will see a well-formed flag that NZD/USD broke below and reached its limit, even dropped below it, with the pair reaching once again the support trendline of the red downwards channel.

The possibility for the pair to break below that trendline is very large, although there might be a correction to the upside for a while.

If the move to the downside reaches the limit of that flag then we can expect a drop of about 970 pips, meaning that the pair will reach 0.6100. Of course, this being the weekly time frame this move to the downside won’t happen overnight. It will take weeks, and the retracements and the patterns it will form on the smaller time frames can be traded on their own.