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NZD/USD is currently held by wedge as break is awaited by bears and bulls
With the US currently dealing with a second wave of the coronavirus pandemic, New Zealand has been the subject of praise by many due to its handling of the crisis already enabling it to reopen its economy.
Australia is now facing a second wave, however, which could potentially put stress on the NZD/USD.
While the NZD/USD has succeeded in recovering from the lows of March this year, bears and bulls have been waiting patiently for a break in any direction, with it currently trading within a wedge formation.
The symmetrical wedge formation within which the NZD/USD has been trading has been marked by higher lows and lower highs, with price action being digested much deeper within the wedge.
Clear areas of support and resistance have been formed in Fibonacci levels, which have kept bears and bulls at bay up until now.
There was a strong bullish trend following its recovery from its lows in March, but this has now slowed down, with a tendency for mean reversion being displayed by the price action.
Bulls could focus on a move extension in the event that prices break over the present wedge, especially given the bull pennant being in its current formation.
A breakout over that could then face important resistance if it reaches 0.66, an important psychological level, though a break below could see the NZD fall toward 0.64.
This would be confluent with the second major move retracement level of 61.8%.
Most retail traders are bearishly biased towards NZD/USD, with short positions being held by 68% of traders.
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