NZD/USD Price Analysis: Inverse head-shoulder in progress

• NZD/USD stabilizes above 0.6000 amid easing US price pressure
• The evolution of the Dollar will be guided by the monthly retail sales data in the US.
• NZD/USD forms an inverse head-shoulder chart pattern.

The NZD/USD pair is looking to stabilize above the 0.6000 psychological resistance as market sentiment has turned bullish due to easing price pressures in the US economy. The pair turns bullish as investors expect the Federal Reserve (Fed) to have ended the interest rate hike as progress in decreasing inflation towards 2% is steady.

S&P500 futures have generated decent gains during the Asian session, indicating a significant improvement in the risk-taking ability of market participants. The DXY Dollar Index remains at lows around 104.00, its lowest level in two months.

US Retail Sales for October will be released at 13:30 GMT. According to the consensus, consumer spending contracted 0.3% compared to the 0.7% growth recorded in September.

The NZD/USD pair forms an inverse head-shoulder chart pattern on the daily chart, indicating a prolonged consolidation. The breakout of said chart pattern will lead to a bullish reversal. The pair breaks above the 50-day EMA, indicating that the main trend has turned bullish.

The Relative Strength Index (RSI) (14) aims to move into the bullish range of 60-80. If the RSI (14) achieves this, bullish momentum will be activated.

More upside would appear if the pair breaks above the neck line of the inverse head-shoulder pattern, which stands from the September 29 high at 0.6050. Thus, further rises would occur towards the August 11 high near 0.6090, followed by the August 4 high at 0.6133.

In an alternative scenario, a break below the November 14 low at 0.5863 would drag the pair towards the November 2 low at 0.5838. A fall below the latter level would expose NZD/USD to the October 26 low at 0.5772.

NZD/USD daily chart