NZD/USD Forex Technical Analysis – Closing Price Reversal Top Signals Shift in Short-Term Momentum

The New Zealand Dollar rose early Thursday on the back of increased demand for risky assets and a weaker U.S. Dollar. Driving the price action was news that Gilead Sciences remdesivir drug had shown positive results in government-run trials. However, buyers couldn’t hold on to those early gains because of strong end of the month profit-taking. This led to the formation of a closing price reversal top that could shift momentum to the downside if confirmed.

On Thursday, the NZD/USD settled at .6128, down 0.0004 or -0.07%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. It turned up earlier in the week when buyers took out a pair of swing tops at .6092 and .6131. Momentum is about to shift to the downside, however, with the formation of a potentially bearish closing price reversal top.

The closing price reversal top won’t change the main trend to down, but if confirmed, it could lead to the start of a 2 to 3 counter-trend break.

The main trend will change to down on a trade through .5911. This is highly unlikely. A trade through .6176 will negate the closing price reversal top and signal a resumption of the uptrend.

The main range is .6448 to .5469. Its retracement zone at .6074 to .5958 is the next support area. This zone is also controlling the near-term direction of the NZD/USD.

The short-term range is .5911 to .6176. Its 50% level at .6043 is another potential support level.

Daily Swing Chart Technical Forecast

Based on Thursday’s price action and the close at .6128, the direction of the NZD/USD on Friday is likely to be determined by trader reaction to yesterday’s low at .6107.

Bearish Scenario

Taking out .6107 will confirm the closing price reversal top. A sustained move under this level will indicate the selling is getting stronger. This should lead to a test of the main Fibonacci level at .6074. If this level fails then look for the selling to possibly extend into the minor pivot at .6043. This is also a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over .6107 will signal the return of buyers. If this move creates enough upside momentum then look for the buying to possibly extend into .6176.