NZD/USD Monthly Chart Analysis: Bearish Inverted Flag Breakdown

Bearish continuation pattern confirmed on the monthly chart.
Kiwi could crowd out weak (bears) hands before revisiting 0.65-0.64 levels.

The NZD/USD pair fell 4.9 percent in October and closed below the monthly 200-MA for the first time since February 2016. NZ politics is to be blamed here and to some extent the broad based USD strength as well.

Monthly chart

The above chart shows-

Bearish inverted flag breakdown - It is a bearish continuation pattern, which indicates that the sell-off from the July 2014 high of 0.8836 has resumed.
5-MA, 10-MA and 50-MA favor the bears (sloping downwards)

NZD to crowd out weak hands?

Note - Major breakdowns/breakouts on the monthly are usually followed by a fake move in the opposite direction, i.e. NZD/USD could revisit 0.70 or 0.71 levels this month, before resuming the slide. The fake move is intended to crowd out weak hands (bears).

In technical parlance, a major breakdown (or breakout) on the monthly chart usually results in oversold (or overbought) conditions on the daily chart. Hence, a corrective move to 0.70-0.71 cannot be ruled out.

View

The long-run outlook has turned bearish.
The spot could revisit 0.70-0.71 handle before resuming the sell-off.
Overall, the pair looks set to re-test 0.65-0.64 levels over the next 3-4 months.
Only a sustained move above 0.72 would abort the bearish view

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