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NZD/USD Forex Technical Analysis – Downtrend Reaffirmed; Weakens Under .7122, Strengthens Over .7160

By:
James Hyerczyk
Published: Jan 18, 2021, 06:34 UTC

The early price action indicates the direction of the NZD/USD will be determined by trader reaction to the short-term Fibonacci level at .7122.

NZD/USD

In this article:

The New Zealand Dollar is trading lower on Monday as a weaker outlook for the U.S. economy weighed on demand for higher risk currencies. The risk-sensitive kiwi finished lower last week and is now down about 0.72% since the beginning of the new year.

Trading was subdued due to a U.S. bank holiday, but weak U.S. data from Friday and a rising virus toll worldwide is casting doubts on global growth prospects. On Friday, the government reported that U.S. retail sales fell for a third straight month in December as renewed measures to slow the spread of COVID-19 triggered job losses, further evidence that the wounded economy lost considerable speed at the end of 2020. Consumer confidence also came in weaker than expected.

At 06:07 GMT, the NZD/USD is trading .7122, down 0.0008 or -0.11%.

In other news, New Zealand government bonds were slightly lower, sending yields half a basis points lower across the curve.  A report showing China’s economy grew at a faster-than-expected pace in the fourth quarter of last year failed to draw the attention of buyers.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The main trend changed to down on November 11 when sellers took out .7153. Today’s trade through .7147 reaffirmed the downtrend. The next main bottom target is .7003.

The main trend will change to up on a trade through .7240, followed by the multiyear high at .7316.

The short-term range is .7003 to .7316. The NZD/USD is currently pressing the weak side of its retracement zone at .7160 to .7122.

The main range is .6589 to .7316. Its retracement zone at .6952 to .6867 is the next major downside target and potential value area.

Daily Swing Chart Technical Forecast

The early price action indicates the direction of the NZD/USD on Monday will be determined by trader reaction to the short-term Fibonacci level at .7122.

Bearish Scenario

A sustained move under .7122 will indicate the presence of sellers. If this move can generate enough downside momentum then look for the selling to possibly extend into the December 21 main bottom at .7003 over the near-term. This is the last potential support before the .6952 to .6867 retracement zone.

Bullish Scenario

A sustained move over .7123 will signal the return of buyers. Overtaking .7160 will indicate the buying is getting stronger with the next potential target the main top at .7240. The trend will change to up if buyers take out this level.

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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