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NZD/USD Technical Analysis: Rejected at 17-Month Resistance

NZD/USD Technical Analysis: Rejected at 17-Month Resistance

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar Rejected Downward After Testing Long-Term Trend Line Resistance
  • Waiting for Actionable Short Trade Setup to Sell in Line with Dominant Trajectory

The New Zealand Dollar was rejected downward after testing falling trend line resistance capping gains since July 2014 against its US counterpart. While the outlines of the near-term upswing from swing lows set from mid-November remain intact, negative RSI divergence warns of ebbing upside momentum and hints a larger topping may be in progress.

From here, a daily close below the 38.2% Fibonacci retracement at 0.6679 opens the door for a test of the 0.6618-31 area, marked by a horizontal pivot and the 50% level. Alternatively, a move above trend line resistance – now at 0.6822 – paves the way for ascent to challenge the October 15 high at 0.6897.

The dominant NZD/USD trend continues to favor the downside. However, prices are too close to near-term support to justify entering short from a risk/reward perspective. Furthermore, confirmation of invalidation of the near-term upswing remains absent for now. With that in mind, we will remain flat and wait for a more actionable opportunity to present itself.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.