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NZD/USD Forex Technical Analysis – Counter-Trend Breakout Over .7027 Could Fuel Surge into .7083

By:
James Hyerczyk

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the 50% level at .7027.

NZD/USD

In this article:

The New Zealand Dollar is trading slightly lower on Wednesday as prices continue to consolidate inside a key retracement zone following a 17-session sell-off that ended late last week.

Yesterday, the Kiwi rose after somewhat dovish testimony from Fed Chair Jerome Powell, but so far we haven’t seen a follow-through rally today. Surprisingly, gains are being capped for the risky currencies despite strong performances in the global equity markets.

At 07:11 GMT, the NZD/USD is trading .7019, down 0.0006 or -0.09%.

Since last week’s plunge in reaction to hawkish Fed moves, Kiwi traders seem to be trying to form a support base, but it’s been a struggle so far due to limited price action in Treasurys and the U.S. Dollar.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6923 will signal a resumption of the downtrend. The main trend will change to up on a move through .7316. This is highly unlikely, but there is room for a normal 50% to 61.8% retracement of the last sell-off.

The minor trend is also down. A trade through .7243 will change the minor trend to up. This will also shift momentum to the upside.

The NZD/USD is currently trading inside a long-term retracement zone at .7027 to .6924. This zone is controlling the near-term direction of the Forex pair.

The minor range is .7243 to .6923. Its 50% level at .7083 is the nearest upside target.

The main range is .7316 to .6923. Its retracement zone at .7120 to .7166 is the primary upside target. Look for sellers on a test of this area. They will be trying to form a potentially bearish secondary lower top.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the 50% level at .7027.

Bearish Scenario

A sustained move under .7027 will indicate the presence of sellers. If this move is able to generate enough downside momentum then look for a move into .6975, followed by the support cluster at .6924 to .6923.

Bullish Scenario

A sustained move over .7027 will signal the presence of buyers. This could trigger an acceleration to the upside with the next target the minor pivot at .7083.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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