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NZD/USD Forming A Head And Shoulder And Challenges Bullish Momentum

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NZD/USD
NZD/USD 5/17/2011 Daily Chart

Short-Term to Medium-Term
- The NZD/USD is seen in the daily chart forming a head and shoulder with the neckline roughly at 0.78.
- Note the RSI reading testing 40, challenging the bullish momentum established with the Mar-April surge.
- The market is bullish, so with a break below 0.78, make sure a pullback doesn’t just shoot back into the head and shoulder formation.
- The break has a conservative target of 0.7620, 50% retracement and near 200SMA.
- A deeper correction, using a pattern breakout projection targets 75.00, which is coincident with the 61.8% retracement level.
- The 4H chart shows a different perspective. Instead of anticipating a head and shoulder than a reversal, another scenario is a complete ABC correction then a return to the bullish mode.
- That is why a pullback can provide more clues. If the market continues lower, it satisfy a wave equality projection to 0.7690. If the market rallies back above 0.79, or the declining trendline, we are likely continuing the bullish trend (this should be accompanied with the 4H RSI reading going above 60).
- Failure to break above 0.7850 would help confirm the bearish intent towards 0.7620 and possibly 0.75.
NZD/USD 4H Chart 5/17/2011

Is this head and shoulder going to provide topping for the medium term, or will the market continue the bull run after an ABC correction ?

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