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.
NZD/USD daily chart created using TradingView
NZD/USD TRADER SENTIMENT
| Change in | Longs | Shorts | OI |
| Daily | -6% | -7% | -6% |
| Weekly | 9% | -2% | 6% |
NZD/USD TRADING RESOURCES:
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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