NZD/USD Forex Technical Analysis – Approaching Major Resistance Cluster at .6723 to .6734

The New Zealand Dollar is trading higher early Wednesday, driven mostly by a weaker U.S. Dollar. There was no economic data released earlier in the session so the rally is likely being helped by short-covering and end of the month position-squaring. Increased demand for higher risk assets this week has also been supportive.

At 0502 GMT, the NZD/USD is trading .6716, up 0.0018 or +0.26%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. It changed to up earlier today when buyers took out the previous main top at .6719. The new main bottom is .6621. A trade through this level will change the main trend to down.

The main range is .6851 to .6544. Its retracement zone at .6697 to .6734 is currently being tested. This zone is controlling the near-term direction of the Forex pair. A major Fibonacci level at .6723 falls inside this zone and is additional resistance.

Daily Technical Forecast

Based on the early price action, the direction of the NZD/USD is likely to be determined by trader reaction to the main 50% level at .6697.

A sustained move over .6697 will indicate the presence of buyers. If this move continues then look for the NZD/USD to challenge several potential resistance levels clustered at .6723, .6724 and .6734. Buyers could lighten up on a trade into this area, or selling pressure could increase.

However, the trigger point for an acceleration to the upside is .6734. The daily chart indicates that there is plenty of room to the upside over this level with the next major target angle coming in at .6794.

The inability to overcome the resistance cluster from .6723 to .6734 will signal the presence of sellers, however, the trigger point for an acceleration to the downside is the 50% level at .6697. If this price is taken out, the NZD/USD could plunge into a short-term uptrending Gann angle at .6661.

Despite the early strength, the market could turn lower suddenly if sellers aggressively defend .6723 to .6734.