NZD/USD Technical Analysis: On the defensive, close below 0.6713 could prove costly

The NZD/USD pair has recovered from a 3.5-month low of 0.6665 seen in the early Asian session but is not out of the woods yet. The spot is currently trading at 0.6732, representing a 0.50 percent drop on a 24-hour basis.

A close below 0.6713 (April 12 low) would confirm a bear flag breakdown, a continuation pattern, which usually accelerates the preceding bearish move. Further, it would reinforce the bearish view put forward by the contracting triangle breakdown, confirmed on April 4, and open the doors for a sustained drop to levels below 0.66.

So, it seems safe to say that a close below 0.6713 could prove costly. The prospects of bearish close would weaken if the spot finds acceptance above Monday's high of 0.6783, although that looks unlikely, courtesy of dovish RBNZ expectations.

Daily chart

Trend: Bearish below 0.6713