Kiwi Weekly Price Outlook: NZD/USD Breakdown Searches for Support

In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The New Zealand Dollar is down more than 2% against the US Dollar since the start of the month with the decline clearing a multi-week range in price. These are the updated targets and invalidation levels that matter on the NZD/USD weekly price chart.

NZD/USD WEEKLY PRICE CHART

(Click on image to enlarge)

Notes: In my previous NZD/USD Weekly Technical Outlook we noted that Kiwi had responded to confluence resistance at the 2019 highs with, “the immediate advance vulnerable sub-6941.” One month later and price is down more than 3.7% from the highs with Kiwi closing below yearly open support last week at 6705.

A break below the 2018 trendline keeps the focus lower while below confluence resistance around 6765/90with initial downside support targets now eyed at the 61.8% retracement of the October advance at 6633and the yearly range low at 6586. Weakness beyond this threshold would be needed to keep the short-bias viable targeting the low-week close at 6507 and the 2015 low-week close at 6453. Critical resistance and broader bearish invalidation steady at 6926/31.

Bottom line: Kiwi has broken below both up-trend support and the multi-month range we’ve been tracking and leaves the risk-weighted to the downside in NZD/USD. From a trading standpoint, the immediate downside may be nearing exhaustion, but the medium-term focus remains lower while below the 100-day moving average at 6965 – look for a reaction on a move into the yearly opening-range lows at 6586for guidance. I’ll publish an updated NZD/USD Price Outlook once we get further clarity in near-term price action.

NZD/USD TRADER SENTIMENT

• A summary of IG Client Sentiment shows traders are net-long NZD/USD - the ratio stands at +2.34 (70.1% of traders are long) – bearish reading
• Traders have remained net-long since April 2nd; price has moved 2.0% lower since then
• Long positions are 5.1% higher than yesterday and 0.5% lower from last week
• Short positions are 6.0% higher than yesterday and 12.6% 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 and the combination of current positioning and recent changes gives us a further mixed Kiwi trading bias from a sentiment standpoint.