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The New Zealand Dollar is under pressure on Friday for a third time this week, putting it in a position to form a potentially bearish weekly closing price reversal top. The bulls are aggressively booking profits as a fresh bout of Brexit uncertainty undermined risk sentiment.
Traders are also looking ahead to the U.S. Federal Reserve’s policy meeting on October 29-30 when it is widely expected to cut its benchmark rate by 25-basis points. This should put pressure on the Reserve Bank of New Zealand (RBNZ) to ease at its meeting on November 13 or risk another sharp rise in the Kiwi that could hurt exports.
At 05:16 GMT, the NZD/USD is trading .6373, down 0.0008 or -0.12%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. A trade through .6436 will signal a resumption of the uptrend. The main trend will change to down on a trade through .6241. This is unlikely, however, there is room for a 50% to 61.8% correction.
The short-term range is .6241 to .6436. Its retracement zone at .6338 to .6315 is the first downside target.
The main range is .6204 to .6436. Its retracement zone at .6320 to .6293 is the second downside target.
Combining the two zones makes .6320 to .6315 the most likely downside target area. Buyers could come in on a test of this zone.
Daily Technical Forecast
Based on the early price action and the current price at .6373, the direction of the NZD/USD is likely to be determined by trader reaction to an uptrending Gann angle at .6381 and a downtrending Gann angle at .6376.
Bullish Scenario
A sustained move over .6381 will indicate the presence of buyers. This could trigger a surge into a downtrending Gann angle at .6406. The next angle drops in at .6421. Look for sellers on a test of these angles.
Bearish Scenario
A sustained move under .6376 will signal the presence of sellers. If this move generates enough downside momentum then look for a break into the short-term 50% level at .6338, followed by the main 50% level at .6320.
This article was originally posted on FX Empire