Kiwi Price Outlook: New Zealand Dollar Counter-Offensive, First Test

The New Zealand Dollar is the worst performer year-to-date against the US Dollar with NZD/USD down more than 2.8%. A test of the May lows held last week with the recovery now eyeing near-term resistance. These are the updated targets and invalidation levels that matter on the NZD/USD charts heading into tomorrow’s FOMC interest rate decision. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

KIWI PRICE CHART - NZD/USD DAILY

(Click on image to enlarge)

NZD/USD Price Chart - Kiwi Daily - New Zealand Dollar vs US Dollar Outlook

Technical Outlook: In my latest New Zealand Dollar Weekly Price Outlook we noted that Kiwi had, “broken the monthly opening-range lows with the decline taking price into weekly support – risk remains for possible downside exhaustion.” Price turned just pips from the 88.6% retracement of the 2018 advance at 6487 with the subsequent rebound now targeting monthly open resistance at 6528.

A breach/close above the median-line is needed to suggest a larger recovery is underway targeting the 61.8% retracement at 6558 and the April lows at 6580. Broader bearish invalidation stands with the upper parallel. A break lower from here would mark resumption of the March downtrend targeting the 2018 low-day close at 6455 & the 2018 low at 6424.

KIWI PRICE CHART - NZD/USD 120MIN

(Click on image to enlarge)

NZD/USD Price Chart - Kiwi 120min - New Zealand Dollar vs US Dollar Outlook

Notes: A closer look at Kiwi price action shows NZD/USD trading within the confines of a descending pitchfork formation extending off the June highs with the 75% line further highlighting near-term resistance at 6528/34 – look for a reaction there. A topside breach keeps the focus on the upper parallel / 6558 – area of interest for near-term price exhaustion. Failure to break this zone would shift the focus back towards the

Bottom line: The Kiwi recovery is now approaching initial resistance targets at 6528/33 and ultimately a topside breach of this formation is needed suggest a more significant low is in place. From a trading standpoint, look to reduce long-exposure / raise protective stops on a move into this resistance zone - risk for near-term exhaustion but IF price is heading higher, losses should be limited to the weekly open. A break of the weekly opening-range lows would keep the focus on 6455.

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