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Kiwi Rally Continues: Bullish Up-Trend Vulnerable Sub-7230

Kiwi Rally Continues: Bullish Up-Trend Vulnerable Sub-7230

Michael Boutros, Strategist

Talking Points

NZD/USD Daily

NZD/USD Daily Chart

Technical Outlook:Kiwi broke above the median-line of an ascending pitchfork formation extending off the yearly lows last month. The subsequent advance is now approaching key resistance at the confluence of the 61.8% retracement of the September 2016 decline and the upper median-line parallel around 7230. The immediate long-bias is at risk heading into this threshold. Interim support is eyed at 7130 with broader bullish invalidation now raised to 7090. A breach above this level targets basic trendline resistance extending off the 2016 high, currently around ~7280s and the yearly high-day reversal close at 7301.

NZD/USD 240min

NZD/USD 240min Chart

Notes: A closer look at price action highlights this key zone of resistance and heading into the close of the week I’ll be looking for possible near-term exhaustion. Initial support rests at 7204 backed by 7149 and the weekly open at 7125- both levels of interest for support IF the pair is going to breach above this resistance zone. The daily average true range (ATR) has been rather tight on kiwi, so for now we’ll target roughly 20-pips per scalp.

NZD/USD Sentiment
  • A summary of IG Client Sentimentshows traders are net-short NZD/USD- the ratio stands at -1.85 (35.1% of traders are long)- bullish reading
  • Retail has been net-short since May 24th – price has rallied 2.9% higher since
  • Long positions are 2.6% higher than yesterday but 20.5% lower from last week
  • Short positions are 9.3% higher than yesterday and 22.4% higher from last week
  • Sentiment continues to point higher for Kiwi as traders continue to build on the short-side. That said, price is approaching resistance and the immediate long-bias is at risk into 7230. From at trading standpoint, I’ll be looking for a reaction there with a setback to offer more favorable long entries.

See how shifts in NZD/USD retail positioning are effecting market trends- Click here to learn more about IG Client Sentiment indicators!

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Relevant Data Releases

Kiwi Rally Continues: Bullish Up-Trend Vulnerable Sub-7230

Other Setups in Play:

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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