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James Hyerczyk

The New Zealand Dollar is trading slightly lower early Friday after posting a potentially bullish closing price reversal bottom the previous session. The chart pattern does not indicate a change in trend is imminent. It only means the buying may be greater than the selling at current price levels.

The reversal to the upside reflects an adjustment in positioning by Kiwi short-sellers due to a plunge in U.S. Treasury yields, which made the U.S. Dollar a less-attractive investment. The short-covering rally was triggered by weaker-than-expected U.S. manufacturing and services PMI reports, which indicated the trade dispute between the United States and China may be affecting the economy.

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At 05:40 GMT, the NZD/USD is trading .6518, down 0.0004 or -0.06%.


Daily Technical Analysis

The main trend is down according to the daily swing chart. The NZD/USD is in no position to change the main trend to up, but momentum may shift to the upside if the closing price reversal bottom is confirmed.

A trade through .6527 will confirm the closing price reversal bottom. This could trigger a 2 to 3 day counter-trend rally. A trade through .6481 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor trend is also down. A trade through .6584 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is .6584 to .6481. Its retracement zone at .6533 to .6545 is the first upside target. Since the main trend is down, sellers could reappear on a test of this zone.

Daily NZDUSD (Close-Up)

Daily Technical Forecast

Based on yesterday’s closing price reversal bottom and close at .6522, the direction of the NZD/USD on Friday is likely to be determined by trader reaction to yesterday’s high at .6527.

Bullish Scenario

Taking out .6527 will confirm the closing price reversal bottom. If this creates enough upside momentum then look for a rally into .6533 then .6545. Watch for sellers on the first test of this area.

Overtaking .6545 will indicate the buying is getting stronger with the minor top at .6584 the next likely upside target.

Bearish Scenario

A sustained move under .6527 will signal the presence of sellers. This could trigger a break back into the series of downtrending Gann angles that had been guiding the NZD/USD lower since March 21. This angles come in at .6506, .6494 and .6479. Crossing to the bearish side of these angles will indicate the selling is getting stronger.

A trade through .6481 could trigger a further decline into the October 26, 2018 main bottom at .6465 and the October 8, 2018 main bottom at .6424.

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