NZD/USD Forex Technical Analysis – Taking Out .6887 Could Trigger Move into Next Main Top at .6922

The New Zealand Dollar is trading lower early Thursday after a report showed New Zealand firms remained broadly pessimistic about the economy in November, an ANZ bank survey showed, though their expectations of their own performance edged up slightly. More importantly, the currency failed to follow-through to the upside following yesterday’s dovish remarks from Federal Reserve Chairman Jerome Powell.

At 0400 GMT, the NZD/USD is trading .6852, down 0.0020 or -0.28%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was confirmed on Wednesday when buyers took out the previous main top at .6885. The main trend will change to down on a trade through .6753.

The first support is a major Fibonacci level at .6818. This is followed by a major 50% level at .6742.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the NZD/USD the rest of the session is likely to be determined by trader reaction to yesterday’s close at .6871.

Bearish Scenario

A sustained move over yesterday’s close at .6871 will indicate the presence of buyers. The first upside target is yesterday’s high at .6887. Taking out this level will reaffirm the uptrend. This could lead to a test of the June 25 main top at .6922.

Bullish Scenario

A sustained move under .6852 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the Fibonacci level at .6818. Since the main trend is up, we could see a technical bounce on the first test of this level.

A failure to hold .6818 will indicate the counter-trend selling is getting stronger. This could fuel an acceleration to the downside with the next targets coming in at .6753 and .6742. The most important level to watch is .6753 because taking it out will change the main trend to down.

On Wednesday, the NZD/USD surged as investors made adjustments because of the possibility of fewer rate hikes by the Fed next year. However, today’s price action indicates investors are still concerned about the economy and are likely worried about the outcome of the talks between the United States and China this week-end.