NZD/USD Forex Technical Analysis – Momentum Shift Could Lead to Test of .6490-.6465

The New Zealand Dollar is trading lower on Friday after reaching its highest level since January 24, during the previous session. Furthermore, following a prolonged move up in terms of price and time, the Kiwi posted a potentially bearish closing price reversal top, which suggests the selling may be greater than the buying just slightly below its nearest main top at .6629. If confirmed, the closing price reversal top could trigger the start of a 2 to 3 day counter-trend break.

At 03:01 GMT, the NZD/USD is trading .6554, down 0.0015 or -0.23%.

Helping to drive the New Zealand Dollar lower is surging demand for the U.S. Dollar. The dollar and other safe-haven currencies are being well bid on Friday after a jump in new coronavirus cases in the United States further undermined the case for a quick economic recovery.

More than 60,000 new COVID-19 infections were reported across the United States on Wednesday, the greatest single-day tally by any country in the pandemic so far, discouraging some American consumers to return to public spaces.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is starting to trend lower with the formation of the closing price reversal top on Thursday.

A trade through .6600 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through the series of main bottoms at .6385, .6383 and .6381.

The minor trend is also up. It will change to down on a move through the last minor bottom at .6519. This will confirm the shift in momentum.

The short-term range is .6381 to .6600. Its retracement zone at .6490 to .6465 is the first downside target. Since the main trend is up, buyers could come in on a test of this zone.

The main range is .5921 to .6585. If the main trend changes to down then look for the selling to possible extend into its retracement zone .6260 to .6180.

Daily Swing Chart Technical Forecast

Based on yesterday’s closing price reversal top and the early price action, the direction of the NZD/USD on Friday is likely to be determined by trader reaction to Thursday’s low at .6551.

Bearish Scenario

A sustained move under .6551 will indicate the presence of sellers. This move will confirm the closing price reversal top and could trigger a break into the minor bottom at .6519, followed closely by the retracement zone at .6490 to .6465.

Bullish Scenario

A sustained move over .6551 will signal the presence of buyers. This could create enough upside momentum to fuel a retest of .6600, followed by the January 24 top at .6629.

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Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.