NZD/USD Forex Technical Analysis – Strengthens Over .6411, Weakens Under .6362

The New Zealand Dollar finished higher on Friday, helped by a weaker U.S. Dollar and a positive comment from a key central bank official. Gains were likely capped by escalating tensions between the United States and China.

The U.S. Dollar fell on Friday after President Trump ordered U.S. companies out of China in reaction to new tariffs from the world’s second largest economy. Greenback investors read the event as bearish amid concerns it may bring the U.S. economy closer to a recession.

The kiwi rose after Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr painted a rosy picture of the local economy and described the 50-basis point cut in the official cash rate earlier this month as “a pre-emptive double cut” to reduce the need to cut more later. He further added, “So we’re pleased with where we are.”

On Friday, the NZD/USD settled at .6396, up 0.0029 or +0.46%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The main trend was reaffirmed when sellers took out the August 7 main bottom at .6378. The selling stopped at .6362, just slightly ahead of the January 20, 2016 main bottom at .6346.

The main trend will change to up on a trade through .6791. This is highly unlikely, but due to the prolonged move in terms of price and time, we will have to start watching for a closing price reversal bottom. If this pattern is formed and confirmed then we could see a 2 to 3 day counter-trend rally.

The minor trend is down. A trade through .6588 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is .6588 to .6362. Its 50% level or pivot at .6475 is a potential upside target and resistance.

The main range is .6791 to .6362. Its retracement zone at .6577 to .6627 is the primary upside target.

Daily Swing Chart Technical Forecast

Based on Friday’s price action, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to Thursday’s high at .6411. This is because the Forex pair formed an inside move on Friday, which typically indicates investor indecision and impending volatility. This move will indicate that traders have made the decision to go long at current price levels.

Furthermore, a move through .6411 will make .6362 a new minor bottom. This will be the first minor bottom formed since August 5.

Bullish Scenario

A sustained move over .6411 will indicate the presence of buyer. If this move creates enough upside momentum then look for the rally to possibly extend into the pivot at .6475 over the near-term.

Bullish Scenario

A sustained move under .6411 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into Thursday’s low at .6362. Taking out this level should lead to a test of the January 20, 2016 main bottom at .6346.

The main bottom at .6346 is a potential trigger point for a steep break with the August 24, 2015 main bottom at .6207, the next major downside target.