The NZD/USD is showing a critical bearish breakout. Is this a major reversal or just a simple pullback? Let’s start with the daily chart.

Price Charts and Technical Analysis

(Click on image to enlarge)

The NZD/USD completed 5 bullish waves (pink/purple). The divergence pattern (purple line) and the break below the 21 ema zone confirms the trend change. Let’s review:

• The main target for a divergence pattern is the 144 ema zone (dark blue MA).
• There is also a 23.6% Fibonacci level located at the 144 ema zone.
• The breakout below the 21 ema and support lines (dotted green) confirms the bearish outlook.
• A bearish continuation (orange arrows) is expected towards the first target zone. An extension is possible to the 38.2% Fib but a bullish bounce is more likely at 0.700.
• The bearish swing could complete a wave A (purple).
• A bullish bounce should create a bullish ABC up within wave B (purple).
• A bearish 5 wave decline could take place in wave C (purple) before a new uptrend emerges (blue arrow).

On the 1 hour chart, a wave 5 (grey) in wave 5 (pink) could complete the wave A (purple) at the round 0.700 level. 

• Price could move up again within wave 4 (orange) and find resistance at the shallow Fib levels.
• A bearish breakout could aim immediately at the Wizz 7 target and the -27.2% Fibonacci level.
• This could complete a wave 5 (orange) in wave 3 (grey).
• A bear flag pattern could emerge in wave 4 (grey).
• One more lower low is expected to complete wave 5 (grey) of wave 5 (pink).

(Click on image to enlarge)