NZD/USD Forex Technical Analysis – Reversal Top or Breakout Over .6448?The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to yesterday’s close at .6426.
The New Zealand Dollar is edging lower on Thursday after yesterday’s rally to .6444 stopped just short of the March 9 main top at .6448. The price action suggests investors are squaring positions ahead of a key announcement about stimulus by the European Central Bank later in the day. Mixed demand for risk in Asia is also weighing on the Kiwi.
At 04:34 GMT, the NZD/USD is trading .6417, down 0.0008 or -0.13%.
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The Kiwi has been supported lately by strength in commodity prices and gains in world stock markets as more economies re-open. While some overshoot if expected, most traders believe the currency will be supported by the country’s continued success in containing the coronavirus.
The Kiwi has also been supported by a plunging U.S. Dollar, which has been losing value for weeks as the greenback loses its appeal as a safe-haven asset.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. Taking out yesterday’s high at .6444 will signal a resumption of the uptrend, while overcoming the swing top at .6448 will reaffirm the uptrend.
The prolonged move up in terms of price and time puts the NZD/USD in a position to post a potentially bearish closing price reversal top. This won’t change the main trend to down, but if confirmed, it could lead to the start of a 2 to 3 day correction.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to yesterday’s close at .6426.
A sustained move over .6426 will indicate the presence of buyers. Overcoming .6448 will indicate the buying is getting stronger. This could trigger a short-term acceleration to the upside.
A sustained move under .6426 will indicate the presence of sellers. Taking out .6360 will indicate the selling is getting stronger.
Closing Price Reversal Top Chart Pattern
Taking out .6444 then closing lower for the session will form a potentially bearish closing price reversal top. If confirmed then look for the start of a 2 to 3 day correction.
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