The New Zealand Dollar is in a position to finish higher for a seventh consecutive session on Tuesday. Most of the rally has been fueled by expectations of an aggressive cut in interest rates by the U.S. Federal Reserve in late July. Short-covering ahead of Wednesday’s Reserve Bank of New Zealand (RBNZ) monetary policy meeting is also boosting prices. The financial markets indicate the RBNZ will leave rates unchanged, but hint at another rate cut in August.
At 04:51 GMT, the NZD/USD is trading .6649, up 0.0031 or +0.48%.
In other news, New Zealand’s trade balance for May showed a 264m surplus versus the expected 250m. The previous month was revised lower to 383m.
Daily Technical Analysis
The main trend is down according to the daily swing chart, however, momentum is trending higher due to the formation of a secondary higher bottom. The main trend will change to up officially on a trade through .6682. This is followed by another main top at .6686.
A trade through .6487 will signal a resumption of the downtrend. This is highly unlikely today, but the seven day rally has put the Forex pair inside the window of time for a potentially bearish closing price reversal top.
The short-term range is .6481 to .6682. Its retracement zone at .6581 to .6558 is support.
The main range is .6939 to .6481. If the main trend changes to up then its retracement zone at .6710 to .6764 will become the primary upside target.
Daily Technical Forecast
Based on the early price action, the direction of the NZD/USD is likely to be determined by trader reaction to the downtrending Gann angle at .6652. This is the last potential resistance angle before the .6682 and .6686 main tops.
A sustained move over .6652 will indicate the presence of buyers. If this move generates enough upside momentum then look for a surge into .6682 to .6686. Taking out these tops could expand the rally into the main 50% level at .6710.
The inability to overcome or sustain a rally over .6652 will signal the return of sellers. This could lead to a test of an uptrending Gann angle at .6627. This angle, moving up at a rate of 0.0020 per day since the bottom at .6487, has been guiding the Forex pair higher since June 14. If this angle fails as support then look for a break into a downtrending Gann angle at .6622.
The angle at .6622 is also the trigger point for an acceleration to the downside with the short-term 50% level at .6581 the next target.
Traders should also watch yesterday’s close at .6618. Taking out this level will put the NZD/USD in a position to post a potentially bearish closing price reversal top.
This article was originally posted on FX Empire
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