NZD/USD Forex Technical Analysis – Weakens Under .6396, Strengthens Over .6441

The New Zealand Dollar is trading lower on Thursday after failing to following through to the upside after posting a solid gain the previous session. The impasse over Brexit and the lack of fresh developments over U.S.-China trade relations seems to be holding the currency in a range.

At 04:03 GMT, the NZD/USD is trading .6407, down 0.0017 or -0.26%.

Yesterday’s rebound rally indicates Kiwi investors are sensitive to demand for risk since the move was highly correlated with the strong rally in the U.S. stock markets. Investors appear to be showing little concern for the expected RBNZ rate cut in November, but may be covering shorts in anticipation of next week’s highly expected Fed rate cut.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6451 will reaffirm the uptrend. The main trend changes to down on a move through .6241.

The short-term range is .6451 to .6204. Its retracement zone at .6356 to .6327 is support.

The intermediate range is .6588 to .6204. Its retracement zone is resistance. It is currently being tested. It stopped the rally at .6436 on Tuesday.

The main range is .6791 to .6204. Its retracement zone at .6498 to .6567 is the major resistance. It is also a value zone so watch for aggressive counter-trend sellers on a trade into this zone.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .6407, the direction of the NZD/USD on Thursday is likely to be determined by trader reaction to the intermediate 50% level at .6396.

Bullish Scenario

A sustained move over .6396 will indicate the presence of buyers. If this move attracts enough buyers then look for a more into the minor top at .6436, the intermediate Fibonacci level at .6441 and the main top at .6451.

The trigger point for an acceleration to the upside is .6451. This is followed by the main 50% level at .6498.

Bearish Scenario

A sustained move under .6396 will signal the presence of sellers. This could trigger a sharp break into the short-term Fibonacci level at .6357.

Side Notes

We’re in a news driven market so traders aren’t paying too much attention to the traditional fundamentals. Risk-on news is likely to be supportive. Risk-off news will likely encourage selling.

In order to avoid getting chopped up in a sideways trade, look for a downside bias to develop on a sustained move under .6396, and for an upside bias to develop on a sustained move over .6441.