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New Zealand Dollar Price Outlook: Kiwi Recovery May be Short-lived

New Zealand Dollar Price Outlook: Kiwi Recovery May be Short-lived

2020-08-18 19:30:00
Michael Boutros, Strategist
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New Zealand Dollar Technical Price Outlook: NZD/USD Weekly Trade Levels

  • New Zealand Dollarupdated technical trade levels - Weekly Chart
  • NZD/USD breakout of multi-year downtrend stalls at technical resistance
  • Kiwi advance vulnerable while below 6733 – key support 6507

The New Zealand Dollar is poised to snap a three-week losing streak against the US Dollar with the Kiwi up more than 0.85% since the Sunday open. The recovery may be short-lived however as price struggles just below multi-year technical resistance. These are the updated targets and invalidation levels that matter on the NZD/USD weekly price chart heading into next week. Review my latest Strategy Webinar for an in-depth breakdown of this Kiwitrade setup and more.

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New Zealand Dollar Price Chart – NZD/USD Weekly

New Zealand Dollar Price Chart - NZD/USD Weekly - Kiwi Trade Outlook- Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; NZD/USD on Tradingview

Notes: In my last New Zealand Dollar Weekly Price Outlook we noted that the Kiwi rally was, “testing confluence slope resistance here and leaves the broader advance vulnerable heading in 6628.” Price closed at 6637 the following week before stalling with multiple intra-week attempts failing into the August open. It’s worth noting that a non-confirmation high with AUD/USD (Aussie breaking to fresh yearly highs – Kiwi holding below yearly open resistance) highlights the threat to both advances as we head deeper into August trade.

Things get tricky up here- note that Kiwi is attempting to breach above multi-year downtrend resistance with the yearly range highs just above. Initial resistance steady at the 100% extension of the March rally at 6628 backed by the 2019 & 2020 yearly opens at 6704 and 6733 respectively. Ultimately a close above the 61.8% retracement of the 2017 decline at 6760 is needed to validate a larger trend reversal in the New Zealand Dollar. Initial support rests at 6507 with a break / close below this threshold risking a larger correction in price towards the late-June lows at 6380.

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Bottom line: The broader New Zealand Dollar rally remains vulnerable at these levels and the immediate focus is on this near-term price recovery. From a trading standpoint, risk for topside exhaustion while below the objective yearly open (6733) with a break below the 65-handle needed to suggest a more significant high was registered this month. Ultimately a deeper pullback may offer more favorable entries with a breach above 6760 needed to fuel the next leg higher in price. 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

New Zealand Dollar Trader Sentiment - NZD/USD Price Chart - Kiwi Outlook- Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-short NZD/USD - the ratio stands at -2.23 (30.97% of traders are long) – bullish reading
  • Long positions are 3.24% higher than yesterday and 21.48% lower from last week
  • Short positions are 8.75% higher than yesterday and 46.18% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests NZD/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger NZD/USD-bullish contrarian trading bias from a sentiment standpoint.
NZD/USD MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 10% 5% 6%
Weekly -12% 18% 8%
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Key New Zealand / US Economic Releases

Key New Zealand / US Economic Releases - NZD/USD Key Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- 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.

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