The NZD/USD pair has been challenging the upper limit of its trading range established since spring. If the August 20 high is surpassed, it could indicate a breakout with significant upside potential.
NZD/USD Daily Chart
After briefly exceeding the range ceiling on August 20, the pair retraced back down, forming a bearish Gravestone Doji candlestick. Despite a subsequent red candle suggesting weakness, NZD/USD only dipped slightly before rebounding to test the range boundary again.
If the pair manages to break above the 0.6248 level, it could signal a confirmed breakout. This would set a target of 0.6448 (bold rectangle) based on the range’s height ratio or a more conservative target of 0.6409 (December 2023 high). Additionally, a bullish trend shift could be expected in the short term.
On the other hand, a drop below the 0.6109 swing low would confirm the continuation of the sideways trend, possibly leading to a retreat towards the range floor around 0.5850.
Analysis:
The NZD/USD pair is on the cusp of a potential breakout from its long-standing trading range. A decisive move above the 0.6248 level could trigger a significant upward momentum, while a failure to breach this resistance may keep the pair range-bound. Traders should closely monitor the price action around these key levels to capitalize on potential trading opportunities.