The New Zealand Dollar is trading slightly better early Friday after touching a multi-year low the previous session. Today’s early move could be a little position-squaring ahead of Fed Chair Powell’s speech at Jackson Hole at 14:00 GMT, or a reaction to the New Zealand Retail Sales report, which came in higher than expectations.
However, I think the biggest influence on the Kiwi is the positive comment from the head of the country’s central bank. Reserve Bank of New Zealand Governor Adrian Orr helped dampen the chances of a September rate cut when he said he was “pleased” with the current level of interest rates following a surprise half-point cut early this month.
At 06:09 GMT, the NZD/USD is trading .6387, up 0.0020 or +0.32%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Thursday when sellers took out the August 7 low at .6378. The selling stopped at .6362, just shy of the January 20, 2016 main bottom at .6346.
A change in trend is not likely with the last main top coming in at .6791. However, due to the prolonged move down in terms of price and time, we should continue to keep an eye out for a closing price reversal bottom formation since this chart pattern tends to indicate a major shift in sentiment.
The minor trend is also down. A trade through .6588 will change the minor trend to up. This will shift momentum to the upside.
The minor range is .6588 to .6362. Its 50% level or pivot at .6475 is resistance.
The main range is .6791 to .6362. Its retracement zone at .6577 to .6627 is another resistance zone.
Daily Technical forecast
Since the NZD/USD is trading inside yesterday’s range, which tends to indicate investor indecision and impending volatility, the direction of the Forex pair the rest of the session is likely to be determined by trader reaction to yesterday’s high at .6411 and yesterday’s low at .6362. Additionally, this chart pattern often signal the start of a transition period from bearish to bullish.
A sustained move under .6362 will indicate the presence of sellers. This could trigger a break into the main bottom at .6346. If this bottom is taken out then look for the selling to extend into the downtrending Gann angle at .6291.
Crossing to the weak side of the downtrending Gann angle at .6291 will put the NZD/USD in an extremely bearish position. This could drive the Forex pair into the August 24, 2015 main bottom at .6207.
Taking out .6411 will break the pattern of lower highs and lower lows. This will also make .6362 a new minor bottom. This may be enough to scare out a few of the weaker shorts. If the move is able to create enough upside momentum then look for a potential drive into the pivot at .6475.
Sellers could come in on the first test of .6475. However, if buyers can overtake this level then there is room to continue the rally into the downtrending Gann angle at .6541.