NZD/USD Forex Technical Analysis – Daily Trend Changed to Up; Next Target .7053 Main Top

The New Zealand Dollar rose sharply higher Wednesday as market jitters over political turmoil in Italy eased allowing ‘risk-on-currencies like the Kiwi to catch a bid. With risk sentiment shifting to the upside, the currency rebounded after several days of consolidation to reach its highest level since May 8.

The NZD/USD settled at .6989, up 0.0088 or +1.26%.

The market is now in a position to post a potentially bullish closing price reversal on the monthly chart. Although the fundamental traders will argue that a rally is not likely to last very long because of the divergence in monetary policy between the hawkish U.S. Federal Reserve and dovish Reserve Bank of New Zealand.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up when the NZD/USD took out the last swing top at .6978. The new swing bottom is .6883. This is also a secondary higher bottom when compared to the May 16 main bottom at .6850.

The short-term range is .7053 to .6850. Its 50% level or pivot is at .6951. This price is new support. The close over this level is helping to give the Forex pair an upside bias.

The main range is .7395 to .6850. If the rally gains enough traction we could see an eventual test of its retracement zone at .7123 to .7187.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Thursday will be determined by trader reaction to yesterday’s close at .6999. A trade through this level will confirm the closing price reversal bottom at .6883.

If the move through .6999 generates enough upside momentum we could see a test of the next swing top at .7053. This is a potential trigger point for an acceleration to the upside with .7123 the minimum upside target.

The inability to breakout or sustain a move over .6999 will signal the presence of sellers. This could drive the NZD/USD back to the 50% level at .6951. This is followed by bottoms at .6883 and .6850.

Watch the price action and read the order flow at .6999 on Thursday. Trader reaction to this level will tell us if the buying is getting stronger, or if sellers are retaking control.