New Zealand Dollar Price Outlook: Kiwi Plunges Through Support
New Zealand Dollar Technical Price Outlook: NZD/USD Weekly Trade Levels
- New Zealand Dollarupdated technical trade levels - Weekly Chart
- NZD/USD targeting 2019 lows after breaking below confluence support
- Check out our 2020 projections in our Free DailyFX USD Trading Forecasts
The New Zealand Dollar is the worst performing currency against the US Dollar among the USD Majors with Kiwi breaking below multi-year slope support into the close of February trade. Growing concerns about the Coronavirus have continued to weigh on market sentiment with stocks posting the largest single-day drop in history yesterday – accordingly, the currency comm bloc has remained under pressure. These are the updated targets and invalidation levels that matter on the NZD/USD weekly price chart. Review my latest Strategy Webinar for an in-depth breakdown of this Kiwitrade setup and more.
New Zealand Dollar Price Chart – NZD/USD Weekly
Notes: In my last New Zealand Dollar Weekly Price Outlook we noted that Kiwi had reversed off, “long-term down-trend resistance and the immediate focus is on this pullback.” A sustained decline off that high has fueled a loss of more than 7.5% year-to-date with Kiwi posting just one weekly advance since the start of 2019.
This week’s sell-off takes NZD/USD below confluence support at 6314/22 - a region defined by the 2019 low-week close and the 78.6% retracement of the September advance. Note that the lower parallel of the ascending pitchfork formation also converges on this zone and further highlights the technical significance of this break- look for resistance there now with a break lower from here exposing the 1.618% extension / 2015 & 2019 lows at (6197-6204). A close below is needed to fuel the next leg lower in the New Zealand Dollar with such a scenario eyeing subsequent support objectives at 6023 and the 2006 low at 5928. Broader bearish invalidation steady at the 2018 low close at 6436.
Bottom line: The New Zealand Dollar has broken below confluence support and leaves the risk weighted to the downside in NZD/USD while below this week’s high. From a trading standpoint, a good idea to reduce short-exposure / lower protective stop on a test of the 62-handle – look for a reaction there for guidance IF reached with close below needed to keep the immediate short-bias viable. I’ll publish an updated New Zealand Dollar Price Outlook once we get further clarity on the near-term NZD/USD technical trade levels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
New Zealand Dollar Trader Sentiment – NZD/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long NZD/USD - the ratio stands at +2.65 (72.61% of traders are long) – bearish reading
- Long positions are5.38% lower than yesterday and 2.93% higher from last week
- Short positions are 11.52% lower than yesterday and 33.64% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZD/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger NZD/USD-bearish contrarian trading bias from a sentiment standpoint.
Key New Zealand / US Economic Releases
Economic Calendar - latest economic developments and upcoming event risk.
Previous Weekly Technical Charts
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- US Dollar Index (DXY)
- Sterling (GBP/USD)
- Australian Dollar (AUD/USD)
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.