Never miss a story from Michael Boutros

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Michael Boutros

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

The New Zealand Dollar is the worst performer year-to-date against the US Dollar with NZD/USD down more than 2.8%. A test of the May lows held last week with the recovery now eyeing near-term resistance. These are the updated targets and invalidation levels that matter on the NZD/USD charts heading in to tomorrow’s FOMC interest rate decision. 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

Kiwi Price Chart - NZD/USD Daily

NZD/USD Price Chart - Kiwi Daily - New Zealand Dollar vs US Dollar Outlook

Technical Outlook: In my latest New Zealand Dollar Weekly Price Outlook we noted that Kiwi had, “broken the monthly opening-range lows with the decline taking price into weekly support – risk remains for possible downside exhaustion.” Price turned just pips from the 88.6% retracement of the 2018 advance at 6487 with the subsequent rebound now targeting monthly open resistance at 6528.

A breach / close above the median-line is needed to suggest a larger recovery is underway targeting the 61.8% retracement at 6558 and the April lows at 6580. Broader bearish invalidation stands with the upper parallel. A break lower from here would mark resumption of the March downtrend targeting the 2018 low-day close at 6455 & the 2018 low at 6424.

Why does the average trader lose? Avoid these Mistakes in your trading

Kiwi Price Chart - NZD/USD 120min

NZD/USD Price Chart - Kiwi 120min - New Zealand Dollar vs US Dollar Outlook

Notes: A closer look at Kiwi price action shows NZD/USD trading within the confines of a descending pitchfork formation extending off the June highs with the 75% line further highlighting near-term resistance at 6528/34 – look for a reaction there. A topside breach keeps the focus on the upper parallel / 6558 – area of interest for near-term price exhaustion. Failure to break this zone would shift the focus back towards the

Learn how to Trade with Confidence in our Free Trading Guide

Bottom line: The Kiwi recovery is now approaching initial resistance targets at 6528/33 and ultimately a topside breach of this formation is needed suggest a more significant low is in place. From a trading standpoint, look to reduce long-exposure / raise protective stops on a move into this resistance zone - risk for near-term exhaustion but IF price is heading higher, losses should be limited to the weekly open. A break of the weekly opening-range lows would keep the focus on 6455.

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

Kiwi Trader Sentiment - NZD/USD Positioning - New Zealand Dollar vs US Dollar Price Chart
  • A summary of IG Client Sentiment shows traders are net-long NZD/USD - the ratio stands at +4.02 (80.1% of traders are long) – bearish reading
  • Traders have remained net-long since April 2nd; price has moved 5.3% lower since then
  • Long positions are 7.4% higher than yesterday and 32.0% higher from last week
  • Short positions are 1.6% higher than yesterday and 32.1% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Kiwi prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger NZD/USD-bearish contrarian trading bias from a sentiment standpoint.

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

---

Relevant New Zealand / US Data Releases

New Zealand / US Data Releases - Economic Calendar

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

Active Trade Setups

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex