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James Hyerczyk

The New Zealand Dollar is trading higher on Monday, recovering about half of its losses since last Thursday. The currency is being supported by a weaker U.S. Dollar and increasing demand for higher risk global equities. Stronger than expected economic data out of China and Japan is the catalyst behind the move.

At 08:43 GMT, the NZD/USD is trading .6884, up 0.0036 or +0.53%.

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Data on Monday showed signs of economic recovery in China and Japan, the world’s second and third largest economies. China’s industrial output rose by a faster-than-expected 6.9% in October, while Japan’s economy grew at its fastest pace on record in the third quarter.

Last week, the Reserve Bank of New Zealand (RBNZ) triggered a rally to levels not seen since March 2019 after it signaled it may not have to introduce negative interest rates early next year.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside with the formation of a closing price reversal top on Thursday and its subsequent confirmation the next day.

A trade through .6915 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through .6589. This is highly unlikely but there is still room to the downside for a normal 50% retracement of its current rally.

The minor trend is also up. A trade through .6811 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is .6915 to .6811. The Forex pair is currently trading on the strong side of its 50% level at .6863, making it new support.

The short-term range is .6589 to .6915. Its 50% level at .6752 is another potential support level.

The main range is .6512 to .6915. Its retracement zone at .6708 to .6662 is controlling the near-term direction of the NZD/USD.


Daily Swing Chart Technical Forecast

The direction of the NZD/USD will be determined by trader reaction to the pivot at .6863. The early price action indicates a bullish tone, making this level support.

Bullish Scenario

A sustained move over .6863 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the minor top at .6915, followed by the March 21, 2019 main top at .6939.

Bearish Scenario

A sustained move under .6863 will signal the presence of sellers. This could trigger a retest of .6811. If this level fails then look for the selling to possibly extend into a minor pivot at .6752.

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

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