NZD/USD Price Analysis: Bears are hungry for a bird sandwich

• NZD/USD bears are ready to feast on the bird. 
• Bears are lurking, eying-up the bear flag around, resistance around 0.5700/20.

NZD/USD is attempting to move in on the 0.5700 area again after printing fresh recovery highs on Tuesday following yesterday’s shock third-quarter Consumer Price Index inflation report. Forecasters have noted that still-surging core inflation pressures will see the Reserve Bank of New Zealand lift the OCR by 75bps at the November MPS. 0.5719 was the high, but the question is, ''will this be the high of the week?''

The following analysis attempt to unravel that mystery.

NZD/USD daily chart

From a daily perspective, while there is room for the upside to test the trend line resistance, the W-formation is bearish and would be expected to pull in the price, at least towards the neckline. If this were to fail as support, there will be prospects of a continuation to the downside, especially on the break of 0.5613, the daily candle's close low. The trading day's low was 0.5622. Both will be targets for the downside. 

NZD/USD H1 chart

Meanwhile, from a lower time-frame perspective, we have three days of longs in the market and little in the way of a shake-out, at least below Tuesday's US session lows of 0.5646. The price action took break-out traders up into 0.5720 area only to be hit by strong sellers, resulting in a move into Day-2 longs from the Asian and the Europen session and in doing so, causing a vacuum of bids that resulted in a break of the trend line.

This may encourage further selling below the US session highs for the day ahead and risks a sell-off, potentially back towards the lows of the week and into Day-1 longs. The bearish flag that is already looking pretty mature and the prospects of a head and shoulders topping pattern only go to reinforce the bearish thesis for the day ahead.