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NZD/USD Technical Analysis: Passing on Short Trade Setup

NZD/USD Technical Analysis: Passing on Short Trade Setup

Ilya Spivak,

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar in Consolidation Mode After Topping Below 0.69 Figure vs. US Namesake
  • Opting to Pass on Short Position as Fed and RBNZ Policy Announcements Loom Ahead

The New Zealand Dollar remains stuck in consolidation mode below the 0.68 figure against its US namesake. Prices edged lower after putting in a bearish Dark Cloud Cover candlestick pattern but sellers have struggled for follow-through below the 0.67 mark.

Near-term support remains at 0.6698, the October 21 low, with a break below that on a daily closing basis opening the door for a test of the 38.2% Fibonacci retracement at 0.6644. Alternatively, a push above the 14.6% Fib expansion at 0.6795 clears the way for a challenge of the 23.6% level at 0.6854.

While entering short seems attractive from a purely technical perspective, we will tactically opt against taking a position. Directional conviction seems unlikely to emerge ahead of back-to-back monetary policy announcements from the Federal Reserve and the RBNZ. The outcomes of the rate decisions may materially alter positioning however, suggesting that entering preemptively is ill-advised. With that in mind, we remain flat.

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