NZD/USD Forex Technical Analysis – Volatility Expected; Strengthens Over .6821, Weakens Under .6805
The New Zealand Dollar is trading nearly flat early Monday a stark contrast from Friday’s selling pressure that took the currency to its lowest level in three months against the U.S. Dollar. Trading in the Kiwi is relatively calm after the initial shock of the discovery of the Omicron coronavirus variant sent investors scurrying for cover last week.
A jump in trading volume is also expected to soothe traders as the major banks and institutions return to the markets after last week’s extended U.S. holiday. Nonetheless, traders should continue to expect volatility with little still known about the new strain.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through Friday’s three-month low at .6805 will signal a resumption of the downtrend.
A move through .7219 will change the main trend to up. This is highly unlikely, but due to the prolonged move down in terms of price and time, today’s session begins with the NZD/USD inside the window of time for a closing price reversal bottom.
The minor trend is also down. A trade through .7053 will change the minor trend to up. This will also shift momentum to the upside.
The minor range is .7053 to .6805. Its 50% level or pivot at .6929 is the nearest upside target.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD on Monday is likely to be determined by trader reaction to .6821 and .6805.
A sustained move over .6821 will indicate the presence of aggressive counter-trend buyers. The first upside target is .6832, followed by .6859.
Taking out .6859 will indicate the buying is getting stronger. This could trigger a near-term acceleration into the minor pivot at .6929.
A sustained move under .6805 will signal the presence of sellers. If traders take out this level with strong selling volume then look for the start of an acceleration into the November 2, 2020 main bottom at .6589 over the near-term.
Taking out .6805 then closing over .6821 will form a potentially bullish closing price reversal bottom on the daily chart. If confirmed, the move could trigger the start of a 2-3 day counter-trend correction.