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James Hyerczyk
New Zealand Dollars

The New Zealand Dollar is trading flat early Wednesday with prices continuing to flatline around the mid-point of the August 7 wide-range trading session. That was the day that the Reserve Bank of New Zealand surprised traders with a 50-basis point rate cut rather than the widely expected 25-basis point reduction. The price action suggests traders are still trying to digest the move in the wake of escalating concerns over a global economic slowdown due to the trade war between the United States and China.

At 02:44 GMT, the NZD/USD is trading .6458, up 0.0001 or +0.01%.

Kiwi traders are also paying close attention to global bond yields and investor demand for riskier currencies. The currency could rally if yields begin to rise. This could lead to greater demand for higher-yielding currencies also.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6378 will signal a resumption of the downtrend.

The main trend will change to up on a trade through .6791. This is highly unlikely, however. Buyers still have to take out three retracement levels and a minor top to start generating enough upside momentum to reach the main top at .6791.

The minor trend is also down. A trade through .6588 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is .6588 to .6378. Its 50% level or pivot at .6483 is controlling the short-term direction of the Forex pair.

The short-term range is .6791 to .6378. Its retracement zone at .6585 to .6633 is the next potential upside target and resistance.


Daily Swing Chart Technical Forecast

Based on the recent price action and the current price at .6458, the direction of the NZD/USD is likely to be determined by trader reaction to the pivot at .6483.

Bearish Scenario

A sustained move under .6483 will indicate the presence of sellers. If this generates enough downside momentum then look for an eventual retest of last week’s low at .6378, followed by the January 20, 2016 main bottom at .6346. This is a potential trigger point for an acceleration to the downside with the next major target the August 24, 2015 main bottom at .6207.

Bullish Scenario

A sustained move over .6483 will signal the return of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the short-term 50% level at .6585, followed closely by the minor top at .6588.

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