NZD/USD Forex Technical Analysis – Headed into Minor Retracement Zone at .6720 to .6690Based on the price action on Thursday and Friday, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the main 50% level at .6781.
The New Zealand Dollar closed lower on Friday after posting an inside move. The chart pattern suggests investor indecision and impending volatility. The price action was likely influenced by an optimistic outlook for the U.S. economy and a pessimistic outlook for New Zealand. Although the Kiwi was supported at times by positive developments in U.S.-China trade negotiations, the news could not offset concerns over Brexit, worries over the local economy and rising Treasury yields.
On Friday, the NZD/USD settled at .6744, down 0.0018 or -0.26%. For the week, the Forex pair was down 0.0090 or -1.31%.
Domestically, prospects for a flat fourth-quarter CPI figure this week, and the risks that Reserve Bank changes to bank capital requirements may slow growth are weighing on the Kiwi. Furthermore, rising U.S. Treasury yields also made the U.S. Dollar a more attractive investment.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top at .6850 on January 15.
A trade through .6850 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through .6591.
The minor trend is up. The minor trend will change to down on a trade through .6707. This will also reaffirm the shift in momentum to down.
The main range is .6970 to .6591. Trading on the bearish side of its retracement zone at .6781 to .6825 has put the Forex pair in a weak position. This zone is also new resistance.
The minor range is .6591 to .6850. Its retracement zone at .6720 to .6690 is the primary downside target. Since the main trend is up, buyers could step in on a test of this zone.
Daily Swing Chart Technical Forecast
Based on the price action on Thursday and Friday, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the main 50% level at .6781.
Overtaking and sustaining a rally over .6781 will indicate the presence of buyers. If this generates enough upside momentum then look for a potential surge into the Fibonacci level at .6825.
A sustained move under the 50% level at .6781 will signal the presence of sellers. This could drive the NZD/USD into the minor 50% level at .6720. Look for a technical bounce on the first test of this level. If this support fails then look for the selling to extend into the minor bottom at .6707, followed by the minor Fibonacci level at .6690. Look for an acceleration to the downside if the Fib level fails as support.