NZD/USD Forex Technical Analysis – Trader Reaction to .7087 Pivot Sets the Tone

The New Zealand Dollar is trading higher late Wednesday, while posting an inside day for the second straight session, indicating investor indecision and impending volatility. The price action comes as no surprise since the major players have headed to the sidelines ahead of a two-day bank holiday. Most of the price action we’re going to see on Thursday and Friday will likely be computer versus computer because of the thin volume.

At 21:41 GMT, the NZD/USD is trading .7101, up 0.0057 or +0.80%.

The Kiwi was also supported by a weaker greenback, which fell as investors returned to riskier assets after shunning them earlier in the week on fears that the spread of a coronavirus variant in the U.K. could threaten the global economic recovery.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Monday when sellers took out .7054. The downtrend was reaffirmed when .7006 failed as support. A move through .7171 will change the main trend to up.

The minor range is .7171 to .7003. Its 50% level at .7087 has been controlling the direction for the last two sessions.

The main range is .6589 to .7171. If the downtrend resumes on a break through .7003 then its retracement zone at .6880 to .6811 could become the primary downside target.

Short-Term Outlook

With the two-day bank holiday starting on Thursday, we’re likely to see the light-volume trend continue into the end of the week. This likely means investors will straddle the pivot at .7087 for a third session.

An upside bias will develop on a sustained move over .7087 with .7171 a potential target.

A downside bias will develop on a sustained move under .7087 with .7003 a potential target.