NZD/USD Forex Technical Analysis – Trader Reaction to .6791 Sets the ToneA sustained move over .6791 could lead to an extended rally with the March 21, 2019 main top at .6939 the next major upside target.
The New Zealand Dollar is trading higher on Friday amid renewed concerns over the strength of the U.S. economy. Traders are also shrugging off yesterday’s data that showed New Zealand suffered its worst economic slump since the Great Depression in the second quarter as a strict nationwide lockdown to combat the coronavirus brought the country to a standstill.
At 06:38 GMT, the NZD/USD is trading .6795, up 0.0040 or +0.59%.
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The Kiwi is also being supported by a weaker U.S. Dollar two days after the Federal Reserve pledged to keep interest rates low for a prolonged period to lift the world’s biggest economy out of a pandemic-induced recession.
Concerns around a stalling recovery are being driven by the Labor Department’s report from Thursday that showed the number of Americans filing new claims for unemployment benefits fell last week, but remained perched at extremely high levels.
Traders have also become concerned that the Fed is out of ammunition. Furthermore, some think the Fed’s message this week indicates major concerns about the economy.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was confirmed earlier today when buyers took out the September 2 main top at .6789. The new main bottom is .6601. A trade through this bottom will change the main trend to down.
The minor trend is also up. The new minor bottom is .6675. Taking out this level will change the minor trend to down and shift momentum to the downside.
The NZD/USD is up seven sessions from its last main bottom. This puts the Forex pair inside the window of time for a potentially bearish closing price reversal top. Therefore, our focus will be on yesterday’s close at .6755.
A sustained move over .6755 will indicate the presence of buyers. Taking out the July 19, 2019 main top at .6791 will indicate the buying is getting stronger. This could lead to an extended rally with the March 21, 2019 main top at .6939 the next major upside target.
A sustained move under .6755 will put the NZD/USD in a position to post a closing price reversal top. This won’t change the trend to down, but if confirmed, it could lead to a 2 to 3 day correction.
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