- NZD/USD pulls back from yearly slope resistance- searching for a low ahead of 7700
- Check out our 3Q projections in our Free DailyFX USD Trading Forecasts
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
The New Zealand Dollar is pulled back from fresh four-month highs against the US Dollar last week with price now targeting areas of interest for near-term price support. These are the updated targets and invalidation levels that matter on the NZD/USD charts heading into the close of the month. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
New to Forex Trading? Get started with this Free Beginners Guide
NZD/USD Daily Price Chart
Technical Outlook: In my previous NZD/USD Price Outlook we noted that, “Key daily support rests at the 6700/15 zone (tested yesterday) with a breach above 6850 needed to fuel the next leg higher in price.” Kiwi briefly registered a high a 6883 before turning lower last week and while the risk remains for a deeper pullback, we’re looking for support into / ahead of the highlighted trendline confluence just above the 6700-handle. Key resistance stands at the upper parallel / 200-day moving average at ~6874 – a breach / close above is needed to fuel the next leg higher targeting the 50% retracement of the yearly range at 6930.
Learn how to Trade with Confidence in our Free Trading Guide
NZD/USD 240min Price Chart
Notes: A closer look at price action shows Kiwi trading within the confines of a descending channel formation (possible bull flag formation) extending off the highs. Price turned just ahead of the 100% extension at 6752 – so was that it? The jury is still out and while the broader outlook remains tilted to the topside, the threat remains for another test of this level if not deeper into the highlighted slope confluence at ~6725 or the 6700/08 zone – both levels of interest for possible price exhaustion / long-entries IF reached. Initial resistance stands at 6819 with a breach above 6874 needed to mark resumption of the broader uptrend.
Even the most seasoned traders need a reminder every now and then- Avoid these Mistakes in your trading
Bottom line: Kiwi has pulled back from uptrend resistance and IF this is just a correction, price should establish a low ahead of 6700. From a trading standpoint, looking for a drop towards the median-line OR a breach and retest of channel resistance as support for long-entries. A downside break below the figure would invalidate the reversal play with such a scenario exposing 6654 and the 61.8% retracement at 6600.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
NZD/USD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-short NZD/USD - the ratio stands at -1.19 (45.7% of traders are long) – weak bullishreading
- Long positions are0.4% higher than yesterday and 3.5% lower from last week
- Short positions are 12.9% higher than yesterday and 22.3% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests NZD/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger NZD/USD-bullish contrarian trading bias.
See how shifts in NZD/USD retail positioning are impacting trend- Learn more about sentiment!
---
Relevant NZD/USD Data Releases
Economic Calendar - latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide !
Active Trade Setups
- AUD/USD Outlook: Aussie Searches for Support after Failed Breakout
- Gold Price Outlook: Recovery Finds Resistance at October Trendline
- EUR/USD Price Outlook: Euro Threatens Breakout– Levels to Know
- AUD/JPY Price Outlook: Reversal Run Plummets into Key Support Zone
- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com
