NZD/USD Surges Through Resistance after RBNZ Rate Hike
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The New Zealand Dollar is trading higher on Wednesday, hitting its best level since January 20, after the Reserve Bank (RBNZ) raised its official cash rate as expected and signaled a more aggressive path forward than even the most hawkish investor had wagered.
At 04:23 GMT, the NZD/USD is trading .6761, up 0.0028 or +0.42%.
The RBNZ raised rates 25 basis points to 1.0% but revealed it came close to moving by 50 basis points to head off a further pick up in inflation expectations.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through the intraday high at .6777 will signal a resumption of the uptrend. A move through .6680 will change the main trend to down.
The main range is .6891 to .6529. The NZD/USD is currently trading on the bullish side of its retracement zone at .6753 to .6710, making it support.
Short-Term Outlook
The direction of the NZD/USD into the close on Wednesday is likely to be determined by trader reaction to the Fibonacci level at .6753.
Bullish Scenario
A sustained move over .6753 will indicate the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly extend into the minor top at .6811.
Taking out .6811 will indicate the buying is getting stronger. This is a potential trigger point for an acceleration to the upside with the next major target the January 13 main top at .6891.
Bearish Scenario
A sustained move under .6753 will signal the presence of sellers. Taking out .6733 will turn the market down for the session, putting it in a position to form a potentially bearish closing price reversal top. This could trigger a further break into the 50% level at .6710. This is the last support before the main bottom at .6680.
A trade through .6680 will change the main trend to down. This could also trigger an acceleration to the downside.
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This article was originally posted on FX Empire