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NZD/USD is in a Vulnerable Rally

The NZD/USD has been consolidating all October. The 4H chart shows an initial double bottom attempt that has evolved into a rising channel. You can imagine that this rising channel is a flag pattern in the higher time-frame. 

NZD/USD 4H Chart 10/29(click to enlarge)

Now, price has broken below the flag pattern, below the cluster of 200-, 100-, and 50-period SMAs in the 4H chart. The 4H RSI has tagged 30. These are signs of bearish continuation.

However, the market said not yet - probably being tentative ahead of the upcoming FOMC statement on Wednesday (10/29). It has rallied the past few sessions, but this rally looks very vulnerable. 

The rally is slow and choppy, and looks like a small flag pattern as it tags 0.7950. A break back below 0.7890 at this point will return price below the SMAs, and break below the small flag pattern. 

This would open up a bearish continuation outlook toward 0.7707 with risk of further downside.

Now if price can hold above 0.79, forgiving a brief break below, and then pops up above 0.80, NZD/USD would pretty much have formed a price bottom from October's price action. This can suggest a bullish correction the width of this consolidation, which was a tad above 300 pips. A pullback that holds above the cluster of moving averages around 0.7920 would add water to the bullish correction outlook.