NZD/USD Forex Technical Analysis – Sellers May Be Targeting Multi-Month Bottom at .6811

The New Zealand Dollar is trading lower early Thursday, following through to the downside after a weak performance the previous session. On Wednesday, the currency rose briefly after the Reserve Bank of New Zealand (RBNZ) sent out a hawkish outlook for interest rates, but swooned later in the session as a mild wave of risk aversion swept through the financial markets.

At 02:44 GMT, the NZD/USD is trading .6857, down 0.0023 or -0.34%.

On Wednesday, the RBNZ announced it would keep rates at 0.25%, after the country was put into a snap COVID-19 lockdown.

The direction of the NZD/USD throughout the session is likely to be dictated by risk sentiment, Treasury yields and the U.S. Dollar. Look for a reaction later in the session at 12:30 GMT, when the U.S. Labor Department releases a report on Weekly Unemployment Claims.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6811 will reaffirm the downtrend.

A move through .7089 will change the main trend to up. This is highly unlikely, but due to the prolonged move down from the last main top in terms of price and time, today’s session starts with the NZD/USD inside the window of time for a potentially bullish closing price reversal bottom.

A closing price reversal bottom won’t change the main trend to up, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend rally.

The minor trend is also down. A trade through .7062 will change the minor trend to up. This will shift momentum to the upside.

The nearest resistance is a Fibonacci level at .6924, followed by a short-term 50% level at .6969 and another 50% level at .7027.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to .6881.

Bearish Scenario

A sustained move under .6881 will indicate the presence of sellers. Taking out the intraday low at .6846 will indicate the selling pressure is getting stronger. This could trigger a sharp break into the November 13, 2020 main bottom at .6811.

Aggressive counter-trend buyers could come in on the first test of .6811. However, the daily chart indicates there is plenty of room to the downside with the November 2, 2020 main bottom at .6589 the next major target so we could see an acceleration into this price.

Bullish Scenario

A sustained move over .6881 will signal the presence of buyers. This could lead to the start of a labored rally with potential targets coming in at .6924 and .6969.