NZD/USD Forex Technical Analysis – Early Strength Suggests Buyers Defending .6378 Main Bottom

The New Zealand Dollar is edging higher against the U.S. Dollar on Wednesday as investors tried to shake off worries about the coronavirus epidemic after new reports showed a slight decline in the number of new cases. The kiwi had been under pressure all week after New Zealand’s prime minister lowered the country’s GDP forecast

At 08:00 GMT, the NZD/USD is trading .6398, up 0.0014 or +0.18%.

Buyers also came in at .6382 on Tuesday just slightly above the recent main bottom at .6378. This suggests that investors came in to protect the Forex pair against a steep decline. Despite today’s early session strength, the NZD/USD has a long way to go before we can become optimistic about a sustained rally.

Daily Technical Analysis

The main trend is down according to the daily swing chart. Taking out .6382 will be the first sign of weakness, while taking out .6378 will signal a resumption of the downtrend.

The minor trend changes to up on a trade through .6488. This will shift momentum to the upside, while taking out .6503 changes the main trend to up.

The first resistance is a long-term Fibonacci level at .6416. The major resistance controlling the longer-term direction of the NZD/USD is a 50% level at .6481.

The short-term range is .6503 to .6378. Its retracement zone at .6441 to .6455 is also resistance.

Daily Technical Forecast

Based on the early price action, the direction of the NZD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to yesterday’s low at .6382.

Bullish Scenario

A sustained move over .6382 will indicate the presence of buyers. This could lead to the start of a labored rally with the first two targets an uptrending Gann angle at .6408 and the main Fibonacci level at .6416.

Overtaking .6416 will indicate the buying is getting stronger. This could trigger an acceleration into the short-term 50% level at .6441.

Bearish Scenario

Taking out .6382 will signal the return of sellers. This should lead to a test of the main bottom at .6378. A move through this bottom will signal a resumption of the downtrend. This could also trigger an acceleration to the downside with the November 8, 2019 main bottom at .6322 the next potential downside target.