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NZD/USD Technical Analysis: Down Trend Ready to Resume?

NZD/USD Technical Analysis: Down Trend Ready to Resume?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Kiwi Dollar may be topping after retesting major trend line barrier
  • Confirmation, passing of event risk needed for actionable trade setup

The New Zealand Dollar may be preparing to turn lower against its US counterpart after retesting the underside of a support level broken in November 2016. Negative RSI divergence hints at ebbing upside momentum and may precede a turn lower, ending the upswing from late-December lows.

Near-term support is at 0.7255, the 23.6% Fibonacci retracement, with a daily close below that opening the door for a test of the 38.2% level at 0.7180. Alternatively, a push above the 23.6% Fib expansion at 0.7358 sees the next upside barrier in the 0.7403-29 area (November 8 high, 38.2% expansion).

RSI divergence is an insufficient indication of reversal by itself and requires further confirmation to make for an actionable short trade setup. Furthermore, the on-coming RBNZ rate decision represents critical event risk that may materially alter positioning. With that in mind, opting to stand aside for now seems prudent.

How will the RBNZ rate decision impact NZD/USD? Join the webinar and watch the reaction live!

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

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