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New Zealand Dollar Outlook: NZD/USD Post-RBNZ Breakout Levels

New Zealand Dollar Outlook: NZD/USD Post-RBNZ Breakout Levels

Michael Boutros, Strategist

New Zealand Dollar Technical Price Outlook: NZD/USD Near-term Trade Levels

  • New Zealand Dollarupdated technical trade levels - Daily & Intraday Charts
  • NZD/USD rallies to fresh weekly highs post-RNBZ – Kiwi eyes downtrend resistance
  • Critical support 6933/41 – Resistance / near-term bearish invalidation 7070/93
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The New Zealand Dollar surged more than 1.24% today on the heels of today’s Reserve Bank of New Zealand interest rate decision with the Kiwi making yet another defense of key technical support at the yearly lows. The recovery takes NZD/USD into the first resistance pivot and we’re looking for possible inflection in the days ahead. 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 Kiwi trade setup and more.

New Zealand Dollar Price Chart – NZD/USD Daily

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

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

Technical Outlook: The New Zealand Dollar has been testing confluence support at the yearly lows for the past two months at 6933/41- a region defined by the objective 2019 swing high and the 1.618% Fibonacci extension of the May decline. The post-RBNZ rebound now takes price back into downtrend resistance at the upper parallel of the descending pitchfork we’ve been tracking off the May highs- looking for possible inflection here with a breach / close above key resistance at 7070/93 ultimately needed to validate a larger price reversal.

New Zealand Dollar Price Chart – NZD/USD 120min

New Zealand Dollar Price Chart - NZD/USD 120min - Kiwi Trade Outlook - NZDUSD Technical Forecast

Notes: A closer look at Kiwi price action shows NZD/USD defending key support yesterday with a breach above the weekly opening-range shifting the focus towards a late-week high. Weekly open support rests at 7002 with bullish invalidation steady at 6933/41- a break / daily close below this threshold would likely fuel another bout of accelerated losses with such a scenario exposing the 100% of the decline off the yearly highs / September 2020 high at 6795/98.

A newly identified ascending pitchfork may be in play here but it’s too early to rely on. That said, look for a reaction on a test of the 38.2% retracement / 2018 yearly open at 7070/93 (converges on the median-line over the next few days) with a breach above needed to keep the long-bias viable towards the 61.8% retracement at 7165 and the upper parallel / 7265/87.

Bottom line: A rebound off key support at the yearly lows now takes the New-Zealand Dollar into multi-month downtrend resistance. From a trading standpoint, look for a break of the 6933-7093 range for guidance with the broader short-bias vulnerable while above the weekly low. Review my latest New Zealand Dollar Price Outlook for a closer look at the longer-term NZD/USD weekly technical trading 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 - NZDUSD Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-short NZD/USD - the ratio stands at -1.02 (50.37% of traders are long) – neutral reading
  • Long positions are 1.47% lower than yesterday and 5.33% higher from last week
  • Short positions are 4.75% higher than yesterday and 2.36% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZD/USD prices may continue to fall. Traders are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed NZD/USD trading bias from a sentiment standpoint.

Key New Zealand / US Economic Releases

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

Economic Calendar - latest economic developments and upcoming event risk.

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--- 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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