NZD/USD Forex Technical Analysis – Strong Short-Sellers Targeting More-Than-One-Year Low at .6589
The New Zealand Dollar fell sharply on Friday, pressured by a stronger U.S. Dollar and weaker Chinese economic data. The U.S. Dollar was mostly steady despite a plunge in U.S. Treasury yields as investors made portfolio adjustments to mixed U.S. employment data and hawkish comments from Fed Chair Jerome Powell earlier in the week.
On Friday, the NZD/USD settled at .6747, down 0.0072 or -1.05%.
Weaker-than-expected China Caixin Composite and Services PMI indices, signs that economic activity is slowing in the world’s second largest economy, spooked Kiwi traders into selling early in the session.
Later in the session, the U.S. Dollar rose against the New Zealand Dollar after the U.S. jobs report showed solid details that suggested the Fed’s plan to accelerate tapering of its asset purchases and to hike rates next year remained intact.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6741 will signal a resumption of the downtrend. A move through .6868 will change the main trend to up.
The first minor range is .6868 to .6741. Its 50% level or pivot at .6805 is potential resistance. The second pivot price resistance is .6897.
The short-term retracement zone at .6980 to .7036 is controlling the near-term direction of the NZD/USD.
The direction of the NZD/USD early Monday is likely to be determined by trader reaction to .6747.
A sustained move under .6747 will indicate the presence of sellers. Taking out .6741 will signal a resumption of the downtrend. This price is a potential trigger point for an acceleration to the downside with the November 2, 2020 main bottom at .6589 the next likely downside target.
A sustained move over .6747 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into the minor pivot at .6805.
Taking out .6805 will indicate the buying is getting stronger. This could trigger an extension of the rally into the main top at .6868.
Taking out .6868 will change the main trend up. This could trigger a further rally into the next pivot at .6897.
Taking out .6741 then turning higher for the session will put the NZD/USD in a position to post a closing price reversal bottom. This won’t change the trend, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend retracement.