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The New Zealand Dollar finished lower last week as investors continued to react to the divergence between the monetary policies of the hawkish U.S. Federal Reserve and the dovish Reserve Bank of New Zealand.
The NZD/USD settled at .7018, down 0.0066 or -0.93%.
Helping to support the Kiwi was an employment report which showed a better-than-expected quarterly Employment Change of 0.6% versus 0.5%. The NZD/USD was also underpinned by the weaker-than-expected U.S. Non-Farm Payrolls report.
Weekly Swing Chart Technical Analysis
The main trend is up according to the weekly swing chart, but momentum is trending lower. This usually means we need to see a secondary lower top form to set up an eventual change in trend to down.
The minor trend is also down. This is also controlling the momentum.
The main range is .6780 to .7437. Its retracement zone is .7109 to .7031. This zone is both resistance and a potential long-term pivot area.
The new short-term range is .7437 to .6984. Its retracement zone at .7211 to .7264 is a potential upside target.
Weekly Swing Chart Technical Forecast
Based on Friday’s close at .7018 and last week’s price action, the direction of the NZD/USD is likely to be determined by trader reaction to the long-term Fibonacci level at .7031.
A sustained move over .7031 will indicate the presence of buyers. If this move generates enough counter-trend upside momentum, we could see a drive into the main 50% level at .7109. Since the main trend is down, we’re likely to see a technical bounce on the first test of this level.
Overtaking .7109 will indicate the counter-trend buying is getting stronger. This is also a potential trigger point for an eventual move into the short-term 50% level at .7211.
A sustained move under .7031 will signal the presence of sellers. This could drive the NZD/USD into last week’s low at .6984. The daily chart indicates there is plenty of room to the downside under this price with the next major downside target coming in at .6780.
Watch the price action and read the order flow at .7031 all week. Trader reaction to this level will tell us whether the sellers are continuing to exert pressure, or if aggressive counter-trend buyers are retaking control.
This article was originally posted on FX Empire