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NZD/USD Technical Analysis: NZ Dollar Rebound in the Works?

NZD/USD Technical Analysis: NZ Dollar Rebound in the Works?

Ilya Spivak, Head Strategist, APAC

NZD/USD Technical ANALYSIS: BEARISH

  • New Zealand Dollar steadies after dropping to 2-month low vs. USD
  • Bullish Morning Star candlestick setup hints a bounce may be on tap
  • Overall chart positioning continues to favor a broadly bearish bias

The New Zealand Dollar is idling in digestion mode having managed a tepid recovery against its US counterpart. The rise comes after the currency slid to a 2-month low having topped above the 0.67 figure and pushed through uptrend support established from October lows (as expected).

On one hand, the rise kept the NZD/USD conspicuously locked within the 0.6425-96 congestion area, painting the rise as corrective within the context of a larger selloff. On the other, it was produced a bullish Morning Star candlestick pattern, which may precede a larger reversal upward.

A daily close back above 0.6496 looks like it would set the stage for prices to extend upward for a challenge bounds of the 2020 downtrend. That is marked by a falling trend line set from the December 30 high, now at 0.6573. This threshold is reinforced by long-term resistance establishing the decline from July 2017.

Alternatively, a turn lower that establishes a foothold below 0.6425 probably targets the 0.6322-36 inflection region next. Below that, NZD/USD sellers face a potent hurdle marked by the 2015 price floor in the 0.6197-0.6245 zone.

New Zealand Dollar vs US Dollar price chart - daily

NZD/USD daily chart created using TradingView

NZD/USD TRADER SENTIMENT

NZD/USD TRADING RESOURCES:

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter

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

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