NZD/USD Price Analysis: Back above key level of 0.6520, shaking out weak bears?

• NZD/USD's 4-hour chart shows failed head-and-shoulders breakdown. 
• The market may be crowding out weak bears. 

NZD/USD is trading near 0.6540 at press time, having printed a low of 0.6488 on Thursday. 

The pair has recovered to levels above 0.6520 – the neckline of the head-and-shoulders pattern, as seen on the 4-hour chart. As such, one may argue that the breakdown confirmed earlier this week has failed. 

While that is true, markets often crowd out weak hands following major breakdowns by revisiting former support-turned-resistance levels, which could be the case here. 

Should the pair fall back below 0.6520, sellers may feel emboldened to press toward horizontal support at 0.6385 (June 30 low). That looks likely, as the 14-day relative strength index is reporting bearish conditions with a below-50 print. 

A close above Wednesday’s high of 0.6651 is needed to put the bulls back into the driver’s seat. 

4-hour chart

Trend: Bearish

Technical levels