NZD/USD Technical ANALYSIS: BEARISH
- NZ Dollar struggling to build lower but 2020 resistance holding
- Initial support at 0.5827, key trend resistance near 0.61 figure
- Sentiment studies hinting at bearish bias but conviction suspect
The New Zealand Dollar has struggled to find immediate downside follow-through after breaking support guiding the upswing against its US counterpart since late March. That is when the Fed’s firefighting efforts began to beat back a USD shortage locking up global credit markets. Nevertheless, prices remain firmly capped by resistance establishing the downtrend since the beginning of the year.
From here, a daily close below the 23.6% Fibonacci expansion at 0.5827 may set the stage for a challenge of the 38.2% level at 0.5639. Invalidating near-term bearish cues probably requires the pair to establish a firm foothold above trend line resistance, which would at this time amount to a close above the 0.61 mark. Such a move is likely to expose support-turned-resistance in the 0.6197-0.6245 zone next.
NZD/USD daily chart created using TradingView
NZD/USD TRADER SENTIMENT
Retail sentiment data shows 53.26%of traders are net-long, with the long-to-short ratio at 1.14 to 1. IG Client Sentiment(IGCS) is typically used as a contrarian indicator, soretail traders being net-long suggests that NZD/USD is biased downward. However, the net-long skew is down compared with a week ago, warning that the potency of positioning-derived bearish signal may be ebbing.
See the full IGCS sentiment report here.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
