- Updated weekly technicals on NZD/USD– price breakout stalls at confluence resistance
- Check out our 4Q projections in our Free DailyFX USD Trading Forecasts
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The New Zealand Dollar rallied more than 8% against the US Dollar since the yearly lows with the price breakout reversing off initial resistance last week. Here are the key targets & invalidation levels that matter on the NZD/USD weekly chart heading into the close of the year. 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
Notes: In last month’s NZD/USD Weekly Technical Outlook we noted that Kiwi was testing multi-year pitchfork resistance around 6811/54 and, “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.” Price registered at a high at 6969 last week before reversing sharply with weekly RSI struggling just below the 60-threshold.
Initial resistance remains steady at 6930 and is backed closely by the 200-week moving average at ~6980s – a breach / close above is needed to keep the long-bias viable with such a scenario targeting subsequent topside objectives at the 61.8% retracement at 7050 and the yearly open at 7094. Confluence weekly support rests at 6761 with broader bullish invalidation at now raised to 6632.
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Bottom line: The breakout in NZD/USD has responded to initial resistance at 6930 and while the immediate risk remains for a pullback off these levels, the medium-term outlook remains constructive while above 6761. From a trading standpoint, we’ll favor fading weakness while above former slope resistance targeting a breakout towards yearly open resistance. I’ll publish an updated NZD/USD scalp report once we get further clarity on near-term price action.
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NZD/USD Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-short NZD/USD - the ratio stands at -1.23 (44.8% of traders are long) – weak bullish reading.
- Long positions are 12.8% higher than yesterday and 3.0% higher from last week
- Short positions are 17.4% higher than yesterday and 37.4% 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 & last week, and the combination of current positioning and recent changes gives us a stronger NZD/USD-bullish contrarian 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
Previous Weekly Technical Charts
- Euro (EUR/USD)
- Australian Dollar (AUD/USD)
- Canadian Dollar (USD/CAD)
- Gold (XAU/USD)
- Crude Oil (WTI)
- Euro vs Japanese Yen (EUR/JPY)
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at firstname.lastname@example.org