NZD/USD May Have to Test Support to Attract New Buyers
The New Zealand Dollar is edging lower on Thursday, but remains within striking distance of a five-month high reached the previous session. The move is being fueled by surging bond yields and expectations for a protracted boom in commodity prices.
At 09:10 GMT, the NZD/USD is trading .6946, down 0.0029 or -0.41%.
As the Kiwi nears major resistance, the buying could become tentative as investors become more concerned about value rather than chasing the headlines. The uptrend will remain intact, but investors will be looking for a pullback into support rather than a breakout over a high.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through yesterday’s high at .6989 will signal a resumption of the uptrend.
A trade through .6729 will change the main trend to down. This is highly unlikely, but since the NZD/USD is up seven days from its last main bottom, it is inside the window of time for a closing price reversal top or at a minimum, a short-term correction.
The minor trend is also up. A trade through .6865 will change the minor trend to down. This will shift momentum to the downside.
The main range is .7219 to .6529. The NZD/USD is currently trading inside its retracement zone at .6874 to .6955 after failing to sustain an attempted breakout over this area.
The minor range is .6729 to .6989. Its 50% level at .6859 is potential support, but also the trigger point for an acceleration to the downside.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to the main Fibonacci level at .6955.
A sustained move over .6955 will indicate the presence of buyers. Taking out yesterday’s high at .6989will indicate the buying is getting stronger. This could trigger an acceleration into the November 18, 2021 main top at .7053 and the November 15, 2021 main top at .7081.
A sustained move under .6955 will signal the presence of sellers. Taking out the previous day’s low at .6936 will indicate the selling pressure is getting stronger. This could trigger an acceleration into a pair of 50% levels at .6874 and .6859.
Since the main trend is up, buyers are likely to come in on a pullback into .6874 – .6859.
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This article was originally posted on FX Empire