NZD/USD Forex Technical Analysis – Reaction to .5958 – .6074 Will Determine Near-Term Direction

The New Zealand Dollar is edging higher on Thursday, helped by increasing demand for risky assets particularly equities, amid hope from signs that new infections with the COVID-19 virus are starting to taper in some of the worst-hit places such as Italy, Spain and New York.

The price action suggests investors are betting on a slim chance that economic lockdowns might start to be loosened soon. This optimism has been strong enough to lift equities and commodity prices, and boost growth-leveraged currencies. Despite this week’s strength, many experts feel gains will be capped when investors start to re-focus on the economic numbers rather than the number of new coronavirus cases.

At 04:47 GMT, the NZD/USD is trading .6016, up 0.0008 or +0.13%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6070 will change the main trend to up. Taking out the last main bottom at .5844 will signal a resumption of the downtrend.

The short-term range is .6448 to .5469. The NZD/USD is currently trading inside its retracement zone at .5958 to .6074. Trader reaction to this zone will determine the near-term direction of the Forex pair.

Daily Technical Forecast

Based on the early price action and the current price at .6016, the direction of the NZD/USD the rest of the session on Thursday is likely to be determined by trader reaction to the downtrending Gann angle at .5988.

Bullish Scenario

A sustained move over .5988 will indicate the presence of buyers. The first upside target is a potential resistance cluster at .6069 to .6074.

The Fibonacci level at .6074 is a potential trigger point for an acceleration to the upside. If this move creates enough upside momentum then look for a test of the downtrending Gann angle currently at .6218.

Bearish Scenario

A sustained move under .5988 will signal the presence of sellers. The first target is the 50% level at .5958. If this fails as support then look for the selling to extend into the uptrending Gann angle at .5884.

Look for the selling pressure to increase if .5884 fails as support. This could lead to a test of the main bottom at .5844. The trend will change to down if sellers take out this bottom.