NZD/USD Technical ANALYSIS: BEARISH
- New Zealand Dollar probing channel floor, may resume downtrend
- Bearish breakout might open the way to extend below 0.57 figure
- Trader sentiment studies suggest sellers may be gaining momentum
The New Zealand Dollar is attempting to restart the downtrend against its US counterpart after recoiling from trend line resistance guiding prices lower since the beginning of the year. Sellers are flirting with a break of rising channel floor support in play since early April.
Confirmation on a daily closing basis would suggest that a corrective upswing has run its course, with the dominant downward bias ready to be reasserted in earnest. The first layer of meaningful support follows at 0.5670, with a further push below that exposing the swing low at 0.5470 next.
Neutralizing immediate selling pressure seems to call for a break above former support in the 0.6197-0.6245 zone, likewise confirmed with a daily close. That would put NZD/USD on a path toward a dense resistance cluster capped by falling trend resistance set from July 2017. Its outer layer is now just above 0.66.
NZD/USD daily chart created using TradingView
NZD/USD TRADER SENTIMENT
Retail sentiment data shows 55.91% of traders are net-long, with the long-to-short ratio at 1.27 to 1. IG Client Sentiment (IGCS) is typically used as a contrarian indicator, sothis positioning tilt suggests that NZD/USD is aiming lower. Furthermore, the net-long skew has grown compared with yesterday and last week. This seemingly makes for a stronger bearish bias.
See the full IGCS sentiment report here.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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