The New Zealand Dollar is edging lower on Tuesday after posting a potentially bullish outside move, closing price reversal bottom the previous session. Yesterday’s turnaround was probably fueled by a weaker U.S. Dollar since the bearish news is piling up on the Kiwi.
Since last week, the anticipation of the Reserve Bank of New Zealand (RBNZ) taking rates negative next year has been weighing on the Kiwi. Furthermore, New Zealand delayed a general election by a month on Monday as it grapples with a new outbreak of the coronavirus in Auckland.
At 05:38 GMT, the NZD/USD is trading .6550, down 0.0010 or -0.14%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, a trade through .6574 could shift momentum to the upside.
On Monday, the NZD/USD formed a potentially bullish closing price reversal bottom. A trade through .6574 will confirm the chart pattern. This won’t change the trend to up, but it could trigger the start of a 2 to 3 day relief rally.
A trade through .6520 will negate the closing price reversal top and signal a resumption of the downtrend. The main trend will change to up on a move through .6691.
The minor trend is down. A trade through .6574 will change the minor trend to up. This will confirm the shift in momentum.
The main range is .6381 to .6716. Its 50% level at .6549 is controlling the near-term direction of the NZD/USD.
The minor range is .6627 to .6520. Its 50% level at .6574 is potential resistance.
The short-term range is .6691 to .6520. Its retracement zone at .6606 to .6626 is another potential resistance area.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the NZD/USD on Tuesday is likely to be determined by trader reaction to the main 50% level at .6549.
A sustained move under .6549 will indicate the presence of sellers. This could lead to a retest of .6520. Taking out this level will negate the closing price reversal bottom and could create the momentum needed to challenge the main bottom at .6503. This price is a potential trigger point for an acceleration to the downside.
A sustained move over .6549 will signal the presence of buyers. This could trigger a rally into the resistance cluster at .6574. This level is a potential trigger point for a surge into the short-term retracement zone at .6606 to .6626.
Since the main trend is down, look for sellers to return on a test of the short-term retracement zone.
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