NZD/USD Forex Technical Analysis – Trader Reaction to .6549 Pivot Sets the Tone Today

The New Zealand Dollar is drifting lower on Monday as investors continue to react to the possibility of sub-zero interest rates after the Reserve Bank of New Zealand announced last week it would expand its large scale asset purchase program (LSAP) to as much as NZ$100 billion ($65.39 billion).

After voting to hold its official cash rate at 0.25% in a widely expected decision on August 12, the RBNZ decision making committee said a package of additional monetary instruments must remain in active preparation, which includes negative interest rates, while purchases of foreign assets also remain an option.

At 04:29 GMT, the NZD/USD is trading .6530, down 0.0013 or -0.21%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6524 will signal a resumption of the downtrend, while a move through .6503 will reaffirm the weakening chart pattern.

The main trend will change to up on a move through the nearest main top at .6691.

The minor trend is also down. A trade through .6627 will change the minor trend to up. This will also shift momentum back to the upside.

The short-term range is .6381 to .6716. The market has been straddling its 50% level at .6549 for several days. Trader reaction to this level will set the tone on Monday.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .6530, the direction of the NZD/USD the rest of the session on Monday is likely to be determined by trader reaction to the pivot at .6549.

Bearish Scenario

A sustained move under .6549 will indicate the presence of sellers. The first downside target is last week’s low at .6524. If this level fails then look for the move to extend into the main bottom at .6503.

The main bottom at .6503 is the trigger point for a potential acceleration to the downside. If selling volume comes in heavy on a break through this level then look for a potential break into the series of main bottoms at .6385, .6383 and .6381 over the near-term.

Bullish Scenario

A sustained move over .6549 will signal the presence of buyers. This could trigger a short-term retracement into .6576 then the minor top at .6627. Since the main trend is down, sellers are likely to come in on a rally into this price levels.