NZD/USD Forex Technical Analysis – Close Under .6883 Forms Closing Price Reversal Top

The New Zealand Dollar is trading lower on Thursday after an early session rally fell just short of the March 21, 2019 main top at .6939. A lower close today would not change the trend, but it could trigger the start of a 2 to 3 day correction of a 50% retracement of the rally since November 2.

At 06:55 GMT, the NZD/USD is trading .6867, down 0.0015 or -0.22%. Early in the session, the Kiwi touched a high of .6915.

Resistance to the U.S. Dollar’s strength in the higher-yielding currencies has been led by the Kiwi, which pushed higher earlier today as the central bank’s tone in Wednesday’s monetary policy statement has traders less convinced that negative rates are a sure thing anymore.

We could be looking at a period of heightened volatility as the response has been mixed as to whether the Reserve Bank of New Zealand (RBNZ) will leave rates unchanged after March 2021 or cut them into negative territory.

Despite the mixed outlook for RBNZ rates, the NZD/USD could continue to appreciate if demand for risky assets keeps climbing due to the possible development of an effective COVID-19 vaccine.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early Wednesday when buyers took out yesterday’s high.

A trade through .6589 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, the NZD/USD is ripe for a closing price reversal top.

The minor range is .6589 to .6915. Its 50% level at .6752 is the nearest downside target.

The short-term range is .6512 to .6915. Its retracement zone at .6708 to .6662 is controlling the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to yesterday’s close at .6883.

Bullish Scenario

A sustained move over .6883 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the intraday high at .6915. Taking out this level could trigger a surge into the March 21, 2019 main top at .6939.

Bearish Scenario

A sustained move under .6883 will signal the presence of sellers. A close under this level will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 break into possibly the 50% level at .6752.

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