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NZD/USD Forex Technical Analysis – Breakout Over .6655 or Plunge into .6589

James Hyerczyk
·2 mins read

The New Zealand Dollar finished nearly flat on Monday in a mostly lackluster trade. The price action was a little tentative with the Kiwi posting an inside move, which usually suggests investor indecision and impending volatility.

Underpinning the Kiwi was increased appetite for risk as some traders increased bets that U.S. policymakers would reach a deal on another round of fiscal stimulus. Traders were also reacting to the news that U.S. President Donald Trump could be discharged from the hospital where he is being treated for COVID-19.

Surprisingly, the news that coronavirus restrictions in Auckland would be lifted this week failed to fuel a sustainable rally. The price action suggests a general uncertainty ahead of the Reserve Bank of Australia’s policy meeting and the Australian budget announcement early Tuesday.

Daily NZD/USD
Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6798 will change the main trend to up. A move through .6512 will signal a resumption of the downtrend.

The short-term range is .6798 to .6512. Its retracement zone at .6655 to .6689 is currently being tested.

The main retracement zone support is .6589 to .6540. Traders formed a loose support base inside this zone between September 23 and September 29.

Short-Term Outlook

The NZD/USD has run into resistance at the 50% level at .6655 three days in a row. Therefore, we conclude that trader reaction to this level will determine the near-term direction of the NZD/USD.

Bearish Scenario

A sustained move under .6655 will indicate the presence of sellers. The first downside target is a pair of lows at .6614. Taking out this level will indicate the selling pressure is increasing. This could trigger a further break into the main 50% level at .6589.

Bullish Scenario

Overtaking and sustaining a rally over .6655 will signal the presence of buyers. If this creates enough upside momentum then buyers should easily overcome last week’s high at .6657. This could trigger an acceleration into the short-term Fibonacci level at .6689.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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