NZD/USD Ready to Challenge Major RT Zone at .6874 – .6955

The New Zealand Dollar strengthened on Friday as investors bet the turmoil caused by the Russian invasion of Ukraine would continue to drive demand for commodities. The Kiwi remained strong despite a surge in the safe-haven U.S. Dollar and a decline in demand for riskier assets like U.S. equities.

On Friday, the NZD/USD settled at .6861, up 0.0061 or +0.90%.

The NZD/USD rose despite reports of rising COVID-19 infections in New Zealand and the government having to battle unrest from anti-vaccination protesters.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the January 13 main top at .6891 will reaffirm the uptrend. A move through .6631 will change the main trend to down.

The main range is the October 21, 2021 main top at .7219 and the January 28 main bottom at .6529. Its retracement zone at .6874 to .6955 is the nearest resistance. This area is also controlling the near-term direction of the Forex pair.

The short-term range is .6891 to .6529. Its retracement zone at .6753 to .6710 is the nearest support area.

Short-Term Outlook

The direction of the NZD/USD early Monday is likely to be determined by trader reaction to .6874.

Bullish Scenario

A sustained move over .6874 will indicate the presence of buyers. This should lead to a quick test of the main top at .6891. This level is a potential trigger point for an acceleration to the upside with the main Fibonacci level at .6955 the next major target.

Bearish Scenario

A sustained move under .6874 will signal the presence of sellers. If this move creates enough downside momentum, we could see the start of a 2 to 3 day break into at least .6751.

Side Notes

Watch for sellers on the first test of .6874 to .6955. If this move creates enough downside momentum, we could see a shift in momentum but not necessarily a change in trend.

Traders naturally take profits at major retracement zones so we won’t be surprised by a short-term top.

If the buying is strong enough to take out the retracement zone then look for an acceleration to the upside on a move through .6955.