2026-01-16 03:50:00
Is that a head and shoulders pattern I’m seeing on the 4-hour time frame of NZD/USD?
Confirmation could bring a selloff that’s the same height as the chart formation.
Better watch out for a potential neckline support break if you’re waiting for a reversal!
The higher-yielding Kiwi seems to be struggling to ward off risk-off vibes that greeted the markets early this year, as a number of factors are keeping uncertainty elevated these days.
For one, resurfacing geopolitical and tariffs tensions appear to be clouding the global economic outlook again, leading traders to flock to the safe-haven dollar instead. At the same time, not-so-downbeat U.S. data have also been enough to keep neutral Fed expectations anchored.
Is NZD/USD poised for more downside then?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the New Zealand dollar and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
NZD/USD has already completed its head and shoulders pattern and is currently testing the neckline, so keep your eyes peeled for a breakdown that could confirm the selloff.
If this happens, the pair could set its sights on bearish targets at S1 (.5690) then S2 (.5650) which lines up with a minor psychological level. Sustained bearish momentum could even drag price down to the November 2025 lows near S3 (.5590)
However, if Kiwi bulls manage to defend the floor, NZD/USD could regain traction on its climb back to R1 (.5790) then R2 (.5850) near the December highs.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
