NZD/USD Forex Technical Analysis – Reaction to .7061 – .7121 Retracement Zone Determines Near-Term Direction
The New Zealand Dollar is inching higher on Wednesday as it tries to regain its footing following softer-than-expected U.S. inflation figures that seem to have dampened immediate expectations for an early tapering by the Federal Reserve at next week’s policy meeting.
Kiwi investors are also being forced to deal with weak investor sentiment with global equity markets under pressure. Lingering concerns over the coronavirus spread are also weighing on demand for the higher –yielding currency. The currency is also being capped by worries about the strength of China’s economy after data showed factory and retail sales growth cooled more sharply than expected last month.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The trend turned down earlier in the session when seller punched through the previous main bottom at .7076. A move through .7157 will change the main trend to up, while a trade through .7170 will reaffirm the uptrend.
The main range is .7316 to .6806. The NZD/USD is currently trading inside its retracement zone at .7061 to .7121.
Additional support levels are layered at .7027, .6988 and .6924.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to .7116.
A sustained move under .7116 will indicate the presence of sellers. Taking out the intraday low at .7074 will indicate the selling pressure is getting stronger. This could trigger a further break into the 50% level at .7061. If this level fails as support then look for the selling to possibly extend into the next 50% level at .7027.
A sustained move over .7116 will signal the presence of buyers. The first upside target is .7121. Overtaking this level will indicate the counter-trend buying is getting stronger. This could trigger a surge into the pair of main tops at .7157 and .7170.
The early price action suggests a downside bias may be developing, however, the weak follow-through to the downside after today’s change in trend suggests it’s going to be a labored event with a few potential support levels protecting the major bottom at .6806.