NZD/USD Forex Technical Analysis – Strengthens Over .6718, Weakens Under .6714Based on the early price action and the current price at .6712, the direction of the NZD/USD the rest of the session on Monday is likely to be determined by trader reaction to a pair of Gann angles at .6714 to .6718.
The New Zealand Dollar is trading higher on Monday after poking through last week’s high while trying to establish a support base on the strong side of the psychological .6700 level. Traders are saying the early strength is being attributed to exporters converting foreign sales proceeds for year-end and on expectations a preliminary trade deal between the United States and China will soon be signed.
At 05:30 GMT, the NZD/USD is trading .6712, up 0.0008 or +0.12%.
According to Kevin Morgan, a senior dealer at OMF, the kiwi appeared to be benefiting from some U.S. Dollar weakness and an “exporters’ rally” as firms with a December year-end sell U.S. Dollar and Euro holdings to convert into local currency.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out Friday’s high. A trade through .6554 will change the main trend to down. This is highly unlikely, but due to the seven session rally, traders should start watching for a closing price reversal top. This chart pattern won’t change the trend to down, but it could trigger the start of a 2 to 3 day correction.
The main range is .6791 to .6204. Its retracement zone at .6567 to .6497 is support. Holding above this zone creates a strong upside bias.
Daily Technical Forecast
Based on the early price action and the current price at .6712, the direction of the NZD/USD the rest of the session on Monday is likely to be determined by trader reaction to a pair of Gann angles at .6714 to .6718.
A sustained move over .6718 will indicate the buying is getting stronger. If this move can create enough upside momentum then look for the rally to possibly extend into the July 19 main top at .6791 over the near-term.
A failure to overcome .6718 and a sustained move under .6714 will signal the return of sellers. If this move can generate enough downside momentum then look for the selling to possibly extend into a pair of Gann angles at .6648 to .6634.
Closing Price Reversal Top
Given the prolonged move up in terms of price and time, a close under .6704 will produce a closing price reversal top. If confirmed, this chart pattern could trigger the start of a 2 to 3 day break or a 50% correction of the last rally.