The New Zealand Dollar managed to eke out a small gain on Friday as traders shrugged off coronavirus news, while maintaining their focus on increased demand for risky commodity-linked assets. A weaker U.S. Dollar and falling U.S. Treasury yields also helped underpin the Kiwi.
The Forex pair traded in a narrow range on low volume, while posting an inside move that typically indicates investor indecision and impending volatility.
On Friday, the NZD/USD settled at .6556, up 0.0020 or +0.30%.
The Forex pair was also underpinned by a jump in the BusinessNZ Manufacturing Index from 39.8 to 56.3, putting the manufacturing sector back into expansion after spending several months in contraction.
Support was also generated by weaker than expected U.S. economic news. Building Permits came in at 1.24M, higher than the previous report, but below the forecast. Preliminary University of Michigan Consumer Sentiment fell to 73.2, down from a revised 78.1. This was also below the estimate.
Daily Swing Chart Technical Analysis
Main Trend Technical Analysis
The main trend is up according to the daily swing chart. A trade through the last main top at .6601 will signal a resumption of the uptrend. There is no resistance above this level until the December 31, 2019 main top at .6758 and the July 19, 2019 main top at .6791.
The main trend will change to down on a trade through the last main bottom at .6385. This is followed closely by a pair of main bottoms at .6383 and .6381.
Minor Trend Technical Analysis
The minor trend is down. This is controlling the momentum. A trade through .6503 will indicate the selling pressure is getting stronger. The minor trend will change to up on a move through .6584.
Retracement Zone Analysis
The minor range is .6601 to .6503. Its 50% level or pivot at .6552 has been controlling the direction of the NZD/USD for several days. The week ended with the Forex pair straddling this level for three days.
The short-term range is .6381 to .6601. Its 50% level or pivot at .6491 is potential support. It’s also a potential trigger point for an acceleration to the downside.
Watch the price action and read the order flow at .6552 early next week. Trader reaction to this level could set the tone.
Look for a bullish tone to develop on a sustained move over .6552.
Weakness is likely to develop on a sustained move under .6552. If this is able to create enough downside momentum then look for a break into the minor bottom at .6503, followed by the 50% level at .6491.
The 50% level at .6491 is a potential trigger point for a steep break into the series of main bottoms at .6385, .6383 and .6381.