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U.S. Equities continue to get hit, Dow Jones now down more than 1,000 points

New Zealand Dollar Technical Forecast: NZD/USD Rally Faces First Test

New Zealand Dollar Technical Forecast: NZD/USD Rally Faces First Test

Michael Boutros, Strategist

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

  • New Zealand Dollarupdated technical trade levels - Weekly Chart
  • NZD/USD recovery targets key pivot / resistance zone - risk for near-term exhaustion
  • Resistance 6898-6941 (key), 7020 – support 6772, 6702/33 (key)
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The New Zealand Dollar surged more than 1.5% against the US Dollar this week with NZD/USD defending a key support zone tested into the close of trade last year. The focus is on a range of resistance just higher with the immediate advance vulnerable into the 69-handle. These are the updated targets and invalidation levels that matter on the NZD/USD weekly price chart. 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: The New Zealand Dollar rebounded off confluent support into the close of the year at 6702/33- a region defined by the 38.2% Fibonacciretracement of the broader 2020 advance and the 2020- yearly open. This level was tested once again into the start of the year before rebounding higher with Kiwi now approaching weekly resistance at the 38.2% retracement of the October sell-off / 2019 swing high at 6898-6941. We’re looking for possible inflection on stretch into this zone IF reached for guidance.

A topside breach / close above would suggest a larger correction may be underway with such a scenario exposing subsequent resistance objectives at the 61.8% retracement at 7020 with the 52-week moving average just higher at 7048- both areas of interest for possible topside exhaustion IF reached. Ultimately, a break below the 2021 lows is needed to threaten resumption of the broader downtrend towards the lower parallel (currently ~6660s) and the 100% extension of the 2021 decline at 6559.

Bottom line: The New-Zealand Dollar recovery off downtrend support is approaching an inflection range around the 69-handle. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops – be on the lookout for possible exhaustion up here. Losses should be limited to this week’s open at 6772 IF price is indeed heading higher with a topside breach needed to suggest a more significant lows was registered last month. I’ll publish an updated New Zealand Dollar Price Outlook once we get further clarity on the near-term Kiwi 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-long NZD/USD - the ratio stands at +1.79 (64.13% of traders are long) – typically bearish reading
  • Long positions are 1.56% lower than yesterday and 5.72% lower from last week
  • Short positions are 2.75% lower than yesterday and 2.42% higher 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 more net-long than yesterday but less 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 Weekly 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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