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New Zealand Dollar Forecast: Five-Week Kiwi Rally Stalls at Resistance

New Zealand Dollar Forecast: Five-Week Kiwi Rally Stalls at Resistance

Michael Boutros, Strategist

New Zealand Dollar Technical Price Outlook: NZD/USD Weekly Trade Levels

  • New Zealand Dollarupdated technical trade levels - Weekly Chart
  • NZD/USD bulls attempt fifth weekly advance into confluent technical resistance
  • Initial support 7111, 6941 (key)– Critical resistance 7265
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The New Zealand Dollar surged nearly 5% off the March lows against the US Dollar with NZD/USD attempting to mark a fifth consecutive weekly rally. The recovery takes price back above the objective yearly open and while the broader focus remains constructive, the immediate advance may be vulnerable into technical resistance here. 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.

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 Price Forecast we noted that a breakdown of the yearly opening-range in Kiwi was, “already extended into the first region of support into 6941/69,” a region defined by the 2019 / December 2018 swing highs. Price registered a low at 6943 before rebounding with the recovery now testing key resistance at the yearly high-week close / 61.8% Fibonacci retracement at 7229/65- we’re on the lookout for possible inflection up here.

Weekly support rests back at 7111 with a break / close below 6941 needed to fuel another leg lower in price. A topside breach / close above these highs would suggest resumption of the broader uptrend with such a scenario exposing subsequent topside resistance objectives at the 2018 high-week close at 7390 and the 2018 swing high at 7437.

Bottom line: A five week rally in the New Zealand Dollar may be vulnerable as price probes key technical resistance. From a trading standpoint, a good region to reduce long-exposure / raise protective stops – be on the lookout for possible topside exhaustion into 7229/65. Losses should be limited to 7100 IF price is indeed heading higher on this stretch. I’ll publish an updated New Zealand Dollar Price Outlook once we get further clarity on the near-term 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 Retail Positioning - Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-short NZD/USD - the ratio stands at -1.96 (33.73% of traders are long) – typically bullish reading
  • Long positions are 27.48% lower than yesterday and 13.69% lower from last week
  • Short positions are unchanged than yesterday and 4.21% 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.

Key New Zealand / US Economic Releases

Key New Zealand / US Economic Releases - NZD/USD Economic Calendar - Kiwi Event Risk

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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