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James Hyerczyk
New Zealand Dollars
New Zealand Dollars

The New Zealand Dollar is trading flat for a second session on Tuesday due to the country’s bank holiday. The U.S. is also on bank holiday due to Christmas. This is keeping the major banks and institutions on the sidelines thereby generating low volume and low volatility.

Investors will have their hands full when trading resumes on Wednesday due to the heightened volatility in the U.S. equity markets and the U.S. government shutdown. Both events are driving investors out of higher risk currencies and into the safe-haven Japanese Yen and Swiss Franc.

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At 1946 GMT, the NZD/USD is trading .6729, unchanged. On Friday, December 21, the last full day of trading, the NZD/USD settled at .6712, down 0.0063 or -0.94%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6705 will signal a resumption of the downtrend. The main trend will change to up on a trade through .6912.

The NZD/USD is in no position to change the main trend to up, but due to the prolonged move down in terms of price and time, it is in the window of time for a potentially bullish closing price reversal bottom. This chart pattern will not change the trend to up, but it can trigger a 2 to 3 day counter-trend rally.

The minor trend is also down. A trade through .6880 will change the minor trend to up. This will also shift momentum to the upside.


Daily Retracement Level Technical Analysis

The main range is .6465 to .6970. Its retracement zone at .6717 to .6658 is currently being tested. The major retracement zone is .6697 to .6633.

Combining the two retracement zones creates support clusters at .6717 to .6697 and .6658 to .6633. Last week’s low at .6705 was hit inside the .6717 to .6697 zone.

On the upside, the main range is .6970 to .6705. Its retracement zone is at .6838 to .6869. The short-term range is .6912 to .6705. Its 50% level is at .6809. Since the main trend is down, sellers are likely to come in on a test of these retracement levels.

Daily Swing Chart Technical Forecast

Based on last week’s price action, the direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to the 50% level at .6717.

Bullish Scenario

A sustained move over .6717 will indicate the presence of buyers. If this move can generate enough upside momentum over the near-term, we could see a rally into the first 50% level at .6809.

Bearish Scenario

A sustained move under .6717 will signal the presence of sellers. The first targets are the low at .6705, followed by the 50% level at .6697.

If sellers can take out .6697 then look for a possible drive into a pair of Fibonacci levels at .6658 and .6633. We could see a technical bounce on the first test of these levels if aggressive counter-trend buyers show up. However, if .6633 is taken out with conviction then look for the start of a steep plunge.

The Fib level at .6633 is a potential trigger point for an acceleration to the downside with the next major target coming in at .6465. This is the October 26 main bottom.

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