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James Hyerczyk

The New Zealand Dollar continues to weaken on expectations of further rate cuts by the Reserve Bank of New Zealand even after central bankers shocked the markets with a surprise 50-basis point rate cut on August 7. Early Thursday, the Kiwi is also being dragged lower by the weakening Chinese yuan which is widely viewed as China’s retaliation to U.S. tariffs.

At 05:53 GMT, the NZD/USD is trading .6383, down 0.0022 or -0.34%.

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Daily Technical Analysis

The main trend is down according to the daily swing chart. It took 11 trading sessions, but the NZD/USD finally took out its spike low at .6378 from August 7. This low was put in after the RBNZ slashed rates more than expected. The move also signaled a resumption of the downtrend.

The main trend will change to up on a trade through .6791. This is not expected over the near-term, however. The only chart pattern that can save this market from lower prices at this time is a closing price reversal bottom. This chart pattern will not indicate a change in trend either, but it will signal that the buying is greater than the selling at current price levels. This could trigger a 2 to 3 day counter-trend rally.

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

The new short-term range is .6588 to .6372. Its 50% level or pivot at .6480 is resistance.

The new main range is .6791 to .6378. Its retracement zone at .6582 to .6631 is additional resistance.


Daily Technical Forecast

Based on the early price action and the current price at .6383, the direction of the NZD/USD the rest of the session is likely to be determined by trader reaction to yesterday’s close at .6405.

Bearish Scenario

A sustained move under .6405 will indicate the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the January 20, 2016 main bottom at .6346.

Taking out .6346 will reaffirm the downtrend. This should trigger a break into a downtrending Gann angle at .6311. Crossing to the weak side of the angle will put the NZD/USD in an extremely bearish position. This could trigger an acceleration to the downside with the next target the August 24, 2015 main bottom at .6207.

Bullish Scenario

A sustained move over .6405 will put the NZD/USD in a position to post a potentially bullish closing price reversal bottom. This won’t change the main trend to up, but it could trigger a 2 to 3 day counter-trend rally into the minor pivot at .6480.

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