One can clearly see the formation of a head and shoulder on the 240 minute chart of the New Zealand-US Dollar pair. The formation has been triggered with price breaking below the support line with a big candle. This gives us more confidence in the move. It also broke through a rising trendline since the start of this upmove a couple of weeks back. Look to take short trades on any little move up.
Head & Shoulders is one of the few patterns which has a target implication – the distance of the head from the support line (called neckline in H&S pattern), this size of downmove will be seen from the neckline below. So the pattern implied target is around .5360 (240 pips off .5600).
Have a look at the hourly chart below. Once price broke through both the support lines, it pulled back to test them. At both attempts it could not hold on & faced selling pressure at those areas again. This increases confidence in the trade.