NZD/USD Forex Technical Analysis – Trader Reaction to .6579 Will Set the Tone on Monday

The New Zealand Dollar lost ground on Friday after climbing to a multi-month high early in the session after reports of a Phase One trade deal between the United States and China put investors into a risk-on mode.

The Kiwi gave back most of its earlier gains throughout the session to finish lower after a number of critics noted several shortcomings in the trade deal. Concerned traders cited a lack of specifics on farm purchase commitments and enforcement mechanisms, a shortage of trust on both sides and U.S. President Donald’s mercurial negotiating style as reasons to worry about the deal.

On Friday, the NZD/USD settled at .6591, down 0.0008 or -0.12%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6636 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at .6523.

On Friday, the NZD/USD formed a potentially bearish closing price reversal top. A trade through .6582 will confirm the chart pattern. This could trigger the start of a 2 to 3 day correction. A move through .6636 will negate the chart pattern.

The short-term range is .6523 to .6636. Its retracement zone at .6579 to .6566 is the first downside target.

The intermediate range is .6395 to .6636. Its retracement zone at .6515 to .6487 is the second downside target.

The main range is .6322 to .6636. Its retracement zone at .6479 to .6442 is the third downside target.

The major range is .6791 to .6204. Its retracement zone at .6498 to .6567 is controlling the longer-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at .6591, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the short-term 50% level at .6579.

Bullish Scenario

A sustained move over .6579 will indicate the presence of buyers. The first upside target is a minor pivot at .6609. Overtaking this level could drive the NZD/USD into the closing price reversal top at .6636.

Bearish Scenario

Taking out .6582 will confirm the closing price reversal top and signal a shift in momentum to the downside. A sustained move under .6579 will indicate the selling is getting stronger. This could trigger a quick break into the major Fibonacci level at .6567.

The Fib level at .6567 is a potential trigger point for an acceleration to the downside. If the selling volume increases on the move then look for a possible break into the main bottom at .6523, followed by the intermediate 50% level at .6515.