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NZD/USD Forex Technical Analysis – Sharp Break Suggests Traders May Be Casting Doubts Over RBNZ Rate Hike

By:
James Hyerczyk
Published: Aug 17, 2021, 04:52 UTC

The direction of the NZD/USD on Tuesday is likely to be determined by trader reaction to .6961.

NZD/USD

In this article:

The New Zealand Dollar is trading sharply lower early Tuesday, pressured by disappointing Chinese economic data from the day before, and worries that the fast-growing outbreaks of COVID-19 in Australia could dampen growth in the Asia-Pacific region.

Meanwhile, the Reserve Bank of Australia (RBA) released dovish minutes from its August meeting, saying it would be prepared to take policy action should coronavirus lockdowns across the country threaten a deeper economic setback.

At 04:32 GMT, the NZD/USD is trading .6951, down 0.0069 or -0.98%.

The size of the drop in the NZD/USD has really caught traders off-guard. Many thought the Kiwi would find support this week, with the Reserve Bank of New Zealand (RBNZ) expected to raise interest rates at its policy review on Wednesday.

The price action suggests that some traders are casting doubts on the RBNZ’s ability to pull-off a hawkish move in the wake of the bearish news from China and the dovish comments from the RBA.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has shifted to the downside. A trade through .7089 will signal a resumption of the uptrend. A move through .6902 will change the main trend to down.

The minor trend is down. This is controlling the momentum. The main trend changed to down earlier today when sellers took out the last minor bottom at .6969. A move through .7062 will change the minor trend to up.

The short-term range is .6881 to .7089. The NZD/USD is currently trading on the weak side of its retracement zone at .6961 to .6985, making it resistance.

On the upside, additional resistance is .7027. The next support level is .6924.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Tuesday is likely to be determined by trader reaction to .6961.

Bearish Scenario

A sustained move under .6960 will indicate the presence of sellers. The first downside target is .6924. If this level fails then look for the selling to possibly extend into a pair of main bottoms at .6902 and .6881.

The main bottom at .6881 is a potential trigger point for an acceleration to the downside with the November 13 main bottom at .6811 the next major target.

Bullish Scenario

A sustained move over .6961 will signal the presence of buyers. This could lead to a labored rally with resistance targets coming in at .6985 and .7027. The latter is a potential trigger point for a surge into .7062 and .7089.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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