NZD/USD Forex Technical Analysis – Trader Reaction to .6357 – .6336 Will Determine Near-Term Direction

The New Zealand Dollar closed lower against the U.S. Dollar on Friday as investors continued to show almost no reaction to a number of conciliatory gestures between the United States and China that could be signaling an easing of tensions over the prolonged trade war. Sellers also hit the Kiwi in response to stronger than expected U.S. Retail Sales data that drove up U.S. Treasury bond yields, while softening the concerns over a U.S. recession.

On Friday, the NZD/USD settled at .6377, down 0.0032 or -0.50%.

Traders are now positioning themselves ahead of Wednesday’s U.S. Federal Reserve interest rate and monetary policy decisions as well as Thursday’s release of the latest New Zealand quarterly GDP data.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6451 will change the main trend to up. A move through .6269 will signal a resumption of the downtrend. Momentum has been trending higher since the formation of the closing price reversal bottom at .6269 on September 3. Momentum is starting to show signs of shifting to the downside.

The short-term range is .6269 to .6451. Its retracement zone at .6357 to .6336 is the next downside target zone. Buyers may come in on the first test of this zone. Aggressive counter-trend buyers will be trying to form a secondary higher bottom. If the zone fails then were likely to see a near-term test of the main bottom at .6269.

The intermediate range is .6588 to .6269. Its retracement zone at .6429 to .6466 provided resistance last week, having stopped rallies at .6445 and .6451.

Daily Technical Forecast

Based on Friday’s price action and the close at .6377, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the downtrending Gann angle at .6391.

Bearish Scenario

A sustained move under .6391 will indicate the presence of sellers. If this generates enough downside momentum then look for a possible move into the minor 50% level at .6357, the short-term uptrending Gann angle at .6349 and the minor 61.8% level at .6336. Aggressive counter-trend buyers could come in on a test of these levels. If .6336 fails as support then look for the selling to possibly extend into the next uptrending Gann angle at .6309.

Bullish Scenario

A sustained move over .6391 will signal the presence of buyers. This could trigger a rally into a resistance cluster at .6429. Overcoming this area will indicate the buying is getting stronger with the next targets, last week’s high at .6451 and the intermediate 61.8% level at .6466.