NZD/USD Technical ANALYSIS: BEARISH
- New Zealand Dollar selloff cut short below 0.60 figure
- Prices aiming for a retest 2020 downtrend once again
- Sentiment studies continue to argue for a bearish bias
The New Zealand Dollar coiled from support in the 0.5911-22 area, with prices now looking set to challenge once again trend line resistance guiding NZD/USD lower since the beginning of the year. The overall trajectory still appears to be bearish while this barrier remains intact however.
A daily close above resistance exposes former support in the 0.6197-0.6245 area. Breaking above this threshold seems like a prerequisite for neutralizing selling pressure in earnest. Doing so would put prices on a path to test a dense cluster of back-to-back resistance levels anchored by a downtrend line from July 2017.
Support is underpinned at 0.5844, the April 3 swing low. Reversing lower from here and securing a foothold below that appears to open the way for a test of support at 0.5670 along the way lower to the spike low at 0.5470 set in mid-March.
NZD/USD daily chart created using TradingView
NZD/USD TRADER SENTIMENT
Retail sentiment data shows 50.43 percent of traders are net-long, with the long-to-short ratio at 1.02 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 last week, rising 24.58 percent. This seems to 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
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
