NZD/USD Forex Technical Analysis – Closed on Weakside of .6599 to .6636 Retracement ZoneGiven Wednesday’s price action and the downside momentum into the close, the direction of the NZD/USD on Thursday is likely to be determined by trader reaction to yesterday’s low at .6543.
The New Zealand Dollar plunged on Wednesday on a combination of weak domestic data and a somewhat hawkish U.S. Federal Reserve. A survey of New Zealand business confidence came in lower than expected, increasing the chances of a rate cut by the Reserve Bank on August 6. This was followed later in the day by a widely expected 25-basis point rate cut by the Fed, and surprisingly less-dovish comments than expected by Chairman Jerome Powell.
On Wednesday, the NZD/USD settled at .6563, down 0.0051 or -0.77%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. It officially turned down on Wednesday when sellers took out the main bottom at .6583. This was no surprise, however, since momentum had been trending lower since the closing price reversal top was formed on July 19 at .6791.
The next major downside target is the June 14 main bottom at .6487. Thursday’s session begins with the NZD/USD down nine days from its last swing top. This puts it in the window of time for a potentially bullish closing price reversal bottom.
The main range is .6481 to .6791. Its retracement zone at .6636 to .6599 is new resistance. Closing on the weak side of this zone is helping to generate its downside bias.
Daily Swing Chart Technical Forecast
Given Wednesday’s price action and the downside momentum into the close, the direction of the NZD/USD on Thursday is likely to be determined by trader reaction to yesterday’s low at .6543.
Taking out .6543 will reaffirm the downtrend. If the downside momentum continues then we could see an eventual test of the pair of bottoms at .6487 and .6481. The major support is the October 16, 2018 main bottom at .6465.
The inability to continue the move through .6543 will signal the presence of buyers. Taking out .6543 then turning higher for the session will put the NZD/USD in a position to form a potentially bullish closing price reversal bottom. If confirmed, this could lead to a 2 to 3 day counter-trend rally.