NZD/USD Forex Technical Analysis – Reaction to .7175 Sets the Tone as Traders Await Aussie CPI Data
The New Zealand Dollar is inching lower early Tuesday in a light trade following yesterday’s bank holiday. Traders appear to be tentative ahead of Wednesday’s Australian inflation report. They may be waiting to see if the Australian data matches last week’s red-hot reading in New Zealand that lifted yields and the currency to a four-month high.
At 02:56 GMT, the NZD/USD is trading .7163, down 0.0005 or -0.06%.
On Tuesday, traders will get the opportunity to react to the latest Consumer Confidence data from the Conference Board at 14:00 GMT. It is expected to dip to 108.40 from 109.30. A lower than expected number will raise doubts over an early Fed rate hike, which would put upward pressure on the Kiwi.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum has been trending lower since the confirmation of the closing price reversal top on October 21.
A trade through .7219 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend changes to down on a move through .6860.
The minor range is .7219 to .7131. The NZD/USD is currently testing its pivot at .7175.
The NZD/USD is also trading on the strong side of a long-term retracement zone at .7121 to .7061, making it support.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD on Tuesday is likely to be determined by trader reaction to .7175.
A sustained move over .7175 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the main top at .7219. Taking out this level will indicate the buying is getting stronger with the June 7 top at .7243 the next target.
A sustained move under .7175 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into this week’s low at .7131, followed by the long-term Fibonacci level at .7121.
Buyers could return on a test of .7121, but if this level fails then look for the selling to possibly trigger an acceleration to the downside with .7061 the next likely target.