Based on the early price action, the direction of the NZD/USD on Friday is likely to be determined by trader reaction to a 50% level at .6768.
The New Zealand Dollar is trading slightly better early Friday as traders position themselves ahead of today’s February U.S. Non-Farm Payrolls report, due to be released at 13:30 GMT. After a week which saw the Kiwi pounded lower by 0.65%, traders are bracing for another day of potential volatility.
Most of the selling this week was being fueled by traders increasing their bets on a rate cut by the Reserve Bank of New Zealand. A weakening global economy also played a role in the selling. Today, it’s the U.S. economy’s turn to set the tone in the market place.
At 05:31 GMT, the NZD/USD is trading .6760, up 0.0005 or +0.07%.
The main trend is down according to the daily swing chart. The next downside target is the February 12 main bottom at .6719. The NZD/USD is in no position to change the main trend to up, but nine days from the last main top at .6903 puts it inside the window of time for a closing price reversal bottom.
The main range is .6592 to .6943. The NZD/USD is currently testing its retracement zone at .6768 to .6726. This zone is controlling the near-term direction of the Forex pair. It provided support on February 12 at .6719 and on February 22 at .6758.
On the upside, the long-term retracement zone at .6781 to .6825 is potential resistance.
Combining the two retracement zones creates a key pivot area at .6768 to .6781.
Based on the early price action, the direction of the NZD/USD on Friday is likely to be determined by trader reaction to a 50% level at .6768.
A sustained move over .6768 will indicate the presence of buyers. The first target is .6781. This level is a potential trigger point for an acceleration to the upside with the first target angle coming in at .6993. Since the main trend is down, look for sellers on a test of this angle.
A sustained move under .6768 will signal the presence of sellers. The next major downside target is a price cluster at .6726 to .6723. Watch for counter-trend buyers on a test of this area. If .6723 fails then look for the selling to extend into a main bottom at .6719, a long-term uptrending Gann angle at .6707 and another main bottom at .6706. The latter is the trigger point for an acceleration to the downside.
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.