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NZD/USD Forex Technical Analysis – Near Term Bullish Over .6441, Bearish Under .6396

James Hyerczyk

The New Zealand Dollar is in a position to post a higher close on Friday, helped by a drop in expectations of a rate cut by the Reserve Bank of New Zealand on November 12, a rate cut by the Federal Reserve last Wednesday and mixed U.S. economic data. Additionally, the Kiwi received a boost late in the session on optimism over a trade deal between the United States and China.

At 20:21 GMT, the NZD/USD is trading .6432, up 0.0018 or +0.29%.

Earlier in the week, Westpac Bank changed its mind and said it doesn’t expect the RBNZ to cut rates in less than two weeks. On Wednesday, the Federal Reserve cut its benchmark interest rate 25 basis points then signaled it would take a break from easing. However, Fed Chair Jerome Powell went on to say the central bank would not begin hiking rates until inflation rose significantly.

On Friday, gains were capped after the U.S. Non-Farm Payrolls report outperformed expectations. However, the rally resumed following the release of another disappointing ISM Manufacturing PMI report.


Daily Technical Analysis

The main trend is up according to the daily swing chart. The earlier trade through the main tops at .6436 and .6451 reaffirmed the uptrend. The main trend will change to down if sellers take out the swing bottom at .6334.

The short-term range is .6791 to .6204. Its retracement zone is .6396 to .6441. This zone is controlling the near-term direction of the market. On Friday, buyers tried to breakout over this range, but the volume wasn’t strong enough, sending the Forex pair back inside this zone.

The main range is .6791 to .6204. Its retracement zone at .6498 to .6567 is the primary upside target.

Daily Technical Forecast

Based on Friday’s price action, the NZD/USD is in a strong position to continue the rally into next week. The Forex pair is trading on the strong side of a long-term downtrending Gann, which is a potentially bullish sign of further upside action.

The NZD/USD is currently trading inside a key retracement zone. This zone comes in at .6396 to .6441. Crossing to the strong side of this zone will put the Forex pair in a bullish position. This could trigger the start of a rally into the major retracement zone at .6498 to .6567.

The inability to overcome .6441 will signal the presence of sellers. This could trigger a break into the 50% level at .6396. Buyers could come in on the first test of this level.

However, if .6396 fails as support, don’t be surprised by an acceleration to the downside.

This article was originally posted on FX Empire