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NZD/USD Forex Technical Analysis – Strengthens Over .6375, Weakens Under .6340

James Hyerczyk

The New Zealand Dollar hit its first target zone on Friday at .6340 to .6375.  Trader reaction to this zone will determine the near-term direction of the currency. Since the main trend is down, sellers could return. They’re going to try to form a secondary low top that could lead to an eventual retest of the recent multi-year low at .6192. Traders will feel their presence if the lower or 50% level at .6340 fails to hold as support. Taking out the upper or 61.8% level at .6375 will indicate the short-covering is getting stronger.

On Friday, the NZD/USD settled at .6356, up 0.0047 or +0.74%.

Fundamentally, plunging yields in the United States is helping to underpin the NZD/USD as well as speculation that the Reserve Bank of New Zealand (RBNZ) trim rates by 25 basis points instead of following the Fed’s lead with a 50 basis point cut. If traders price in a 50 basis point cut by the RBNZ at its next meeting on March 25 then look for the NZD/USD to eventually resume its downtrend.


Daily Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a move through the last main top at .6488. A trade through .6192 will signal a resumption of the downtrend.

The minor trend is up. The minor trend turned up on Friday when buyers took out a pair of minor tops at .6335 and .6359. This move shifted momentum to the upside.

The short-term range is .6488 to .6192. Its retracement zone at .6340 to .6375 was tested on Friday. It could be resistance or a potential launching pad for a surge to the upside.

The minor range is .6192 to .6373. Its 50% level or pivot is potential support.

Daily Technical Forecast

Based on Friday’s close at .6356, the direction of the NZD/USD is likely to be determined by trader reaction to the 50% level at .6340 and the 61.8% level at .6375.

Bullish Scenario

A sustained move over .6375 will indicate the presence of buyers. This could trigger a move into the downtrending Gann angle at .6398. This is a potential trigger point for an acceleration to the upside with the next potential target angle coming in at .6443. This is the last potential resistance angle before the .6448 minor top and the .6488 main top.

Bearish Scenario

A sustained move under .6340 will signal the return of sellers. The first downside target area is a cluster of Gann angles at .6319, .6308 and .6302.

Taking out .6302 could lead to a test of the pivot at .6282. If this level fails then look for the selling to possibly extend into the next uptrending Gann angle at .6252.

This article was originally posted on FX Empire