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In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. The New Zealand Dollar has rallied nearly 5% off the yearly lows with price now targeting critical down-trend resistance. Here are the key targets & invalidation levels that matter on the NZD/USD weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

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NZD/USD Weekly Price Chart

NZD/USD Weekly Price Chart

Notes: In last month’s NZD/USD Weekly Technical Perspective we highlighted a critical support confluence at 6453/88 – a region defined by the 2015 low-week close, the sliding parallel of the broader descending slope (red) and the median-line of the pitchfork extending off the 2017/2018 highs. Price registered a low at 6424 the following week before reversing sharply higher with the advance now testing a critical resistance range at 6811/54 where the 38.2% retracement of the yearly range converges on the 2017 low-week close and down-slope resistance (blue).

The focus is on a reaction off this key zone with the immediate long-bias at risk while below. Interim support rests at the trendline confluence around ~6640s backed by the low-week close at 6506. Ultimately a break below 6453 would be needed to mark resumption of the broader downtrend targeting the 2016 lows at 6347. A topside breach / close above this formation would suggest a more significant low is in place with such scenario targeting the 50% retracement / 52-week moving average at 6930/32.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line:Kiwi is testing weekly resistance at 6811/54 and the risk for near-term exhaustion remains while below this level. From a trading standpoint, the immediate threat is lower but ultimately a set-back would offer more favorable long-entries while above 6506. I’ll publish an updated NZD/USD Scalp Report once we get further clarity on near-term price action- for now, look for a break of the 6640–6854 range for guidance.

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NZD/USD Trader Sentiment

NZD/USD Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-long NZD/USD - the ratio stands at +1.17 (53.9% of traders are long) – weak bearish reading
  • Long positions are8.7% higher than yesterday and 13.1% lower from last week
  • Short positions are 2.0% lower than yesterday and 10.9% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZD/USD prices may continue to fall. However, traders are more net-long than yesterday but less net-long from last week and the combination of current positioning and recent changes gives us a further mixed NZDUSD trading bias from a sentiment standpoint.

See how shifts in NZD/USD retail positioning are impacting trend- Learn more about sentiment!

Relevant NZD/USD Data Releases

NZD/USD Economic Calendar

Economic Calendar– for the latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Previous Weekly Technical Charts

Learn how to Trade with Confidence in our Free Trading Guide

--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com