NZD/USD Forex Technical Analysis – Reversal Top Confirmed; Weakens Under .7265, Strengthens Over .7305

The New Zealand Dollar is trading nearly flat early Tuesday after confirming yesterday’s potentially bearish closing price reversal top. The Kiwi spiked higher early in the session on Monday as a disappointing U.S. jobs report pressured the greenback and as strong commodity prices aided risk appetite.

At 07:28 GMT, the NZD/USD is trading .7263, up 0.0002 or +0.02%.

Prices retreated late in the session on Monday after U.S. stocks plunged. A firm U.S. Dollar and slightly higher Treasury yields also weighed on the Kiwi. Position-squaring ahead of Wednesday’s U.S. consumer inflation report may also be capping gains.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, the confirmation of Monday’s closing price reversal top shifted momentum to the downside. This could trigger the start of a 2 to 3 day correction.

A trade through .7305 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through .7115.

The short-term range is .7465 to .6943. The NZD/USD is currently testing the upper or Fibonacci level of its retracement zone at .7266. The 50% level comes in at .7204.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Tuesday is likely to be determined by trader reaction to .7266

Bullish Scenario

A sustained move over .7266 will indicate the presence of buyers. This could generate the upside momentum needed to retest .7305. Taking out this level will signal a resumption of the uptrend. It could also lead to an acceleration to the upside. The daily chart indicates there is plenty of room to the upside with .7465 the next major target.

Bearish Scenario

A sustained move under .7265 will signal the presence of sellers. If this move creates enough downside momentum then look for a break into .7204. Since the main trend is up, buyers could come in on a test of this level. A failure to hold this level could trigger an acceleration to the downside with .7115 the next potential downside target.

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