NZD/USD Price Analysis: Extends downside after Inverted Flag breakdown, 0.6060 a key support

• The asset has extended losses after a downside break of the Inverted Flag.
• Broadly, the kiwi bulls will find a cushion around 0.6060.
• The RSI (14) has shifted into the bearish range of 20.00-40.00, which signals more downside ahead.

The NZD/USD pair has attempted a firmer rebound after declining to near 0.6100 in the Asian session. The pair has given an upside break of the consolidation formed in a narrow range of 0.6106-0.6120 and is expected to display a firmer pullback move ahead.

On a four-hour scale, the breakdown of the ‘Inverted Flag’ has resulted in a steep decline in the asset. Usually, the consolidation phase in the above-mentioned chart pattern indicates the initiation of significant shorts by the market participants. Going forward, the downside will remain favored, however, a pullback move towards the 10-Exponential Moving Average (EMA) cannot be ruled out. Also, the horizontal cushion for supporting the kiwi bulls is plotted from July 14 low at 0.6060.

The 20-EMA at 0.6180 is in a declining mode, which adds to the downside filters. Also, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more downside ahead.

A pullback move to near 10-EMA at 0.6160 will trigger a bargain sell, which will drag the asset towards the round-level support at 0.6100, followed by July 14 low at 0.6060.

Alternatively, a break above Thursday’s high at 0.6252 will send the asset towards August 8 high at 0.6304. A breach of the latter will unleash the kiwi bulls for further upside towards the August 1 high at 0.6353.

NZD/USD four-hour chart