NZD/USD Forex Technical Analysis – Continues to Find Resistance Inside Retracement Zone at .7204 to .7266

The New Zealand Dollar is trading flat on Friday, but remains in a position to post another week of solid gains. Prices of soft commodities and foods have also risen in recent days, particularly benefiting the Kiwi Dollar. New Zealand is the world’s leading supplier of dairy.

A combination of strong commodity prices and a soft U.S. Dollar have been providing support for several weeks. Higher yields have also made the Kiwi a more attractive investment. New Zealand government bonds were sold off, sending yields about 3-4 basis points higher across the long-end of the curve.

At 06:04 GMT, the NZD/USD is trading .7245, up 0.0003 or +0.05%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, yesterday’s closing price reversal top may be an early sign that momentum is getting ready to shift to the downside.

A trade through .7287 will negate the closing price top and signal a resumption of the uptrend. A move through .7223 will confirm the chart pattern and shift momentum to the downside. The main trend changes to down on a move through .7146.

The minor trend is also up. A trade through .7189 will change the minor trend to down. This will confirm the shift in momentum.

The main range is .7465 to .6943. The NZD/USD is currently testing its retracement zone at .7204 to .7266.

The short-term range is .6943 to .7287. If the main trend changes to down then .7115 to .7074 will become the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Friday is likely to be determined by trader reaction to .7242.

Bullish Scenario

A sustained move over .7242 will indicate the presence of buyers. The first upside target is the main Fibonacci level at .7266, followed by this week’s high at .7287.

The daily chart indicates there is plenty of room to the upside so a breakout over .7287 could trigger an acceleration to the upside with the next target the February 25 main top at .7465.

Bearish Scenario

A sustained move under .7242 will signal the presence of sellers. Taking out .7222 will confirm yesterday’s closing price reversal top. This will shift momentum to the downside with .7204 the next likely target, followed closely by the minor bottom at .7189. This is the last potential support before the .7146 main bottom.

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