NZD/USD Forex Technical Analysis – Main Trend Changes to Down on Trade Through .6581

Crossing to the weak side of the main Fibonacci level at .6567 will indicate the selling is getting stronger.
James Hyerczyk

The New Zealand Dollar settled lower on Friday after giving up earlier gains. Early in the session, the Kiwi jumped on the back of better-than-expected Consumer Inflation data that likely means the Reserve Bank will hold rates steady in February. These gains were erased as traders reacted to bearish news regarding the worsening of the coronavirus outbreak in China.

On Friday, the NZD/USD settled at .6608, down 0.0011 or -0.16%. This was down from an intraday high of .6629.

According to reports over the week-end, the coronavirus is spreading. This is likely creating a “risk-off” scenario for Monday’s opening. Therefore, we’re looking for downside pressure early in the session.


 Daily Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through .6581 will change the main trend to down. Trades through previous main bottoms at .6554 and .6522 will reaffirm the downtrend. The last main top is .6758.

The minor trend is down. This is generating the downside momentum. A trade through .6665 will change the minor trend to up.

The main range is formed by the July 19, 2019 main top at .6791 and the October 1, 2019 main bottom at .6204. Its retracement zone at .6567 to .6497 has been holding up the NZD/USD since December 19.


Short-Term Outlook

Based on Friday’s price action and the close at .6608, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the uptrending Gann angle at .6609.

A sustained move under .6609 will indicate the presence of sellers. If the downside momentum increases on this move then look for sellers to go after the main bottom at .6581. Taking out this bottom will change the main trend to down.

Crossing to the weak side of the main Fibonacci level at .6567 will indicate the selling is getting stronger. This could trigger an acceleration to the downside with the next major target the 50% level at .6497. Look out to the downside if the 50% level fails to hold as support.

On the upside, overtaking the uptrending Gann angle will indicate there is still life left in this currency. Potential upside targets include a minor top at .6665 and a downtrending Gann angle at .6673.

Side Notes

We’re in a news driven market and the news is bearish so we’re leaning toward the short-side. We’re also looking for heightened volatility. As of early Saturday, there have been no reports of the coronavirus in New Zealand.

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