NZD/USD Technical Outlook: Price Reversal Targeting Trend Support

NZD/USD DAILY PRICE CHART

(Click on image to enlarge)

NZD/USD Daily Price Chart

Technical Outlook: In my latest NZD/USD Weekly Technical Outlook we noted that price had, “responded to initial resistance at 6930 and while the immediate risk remains for a pullback off these levels, the medium-term outlook remains constructive.” Price is threatening a break below confluence support today around 6850 where the May low converges on the 200-day moving average – a close below this level would risk a deeper correction towards the median-line. Note that an RSI support trigger has already broken & offered resistance and further highlights the near-term threat.

NZD/USD 240MIN PRICE CHART

(Click on image to enlarge)

NZD/USD Price Chart - 240min

Notes: A closer look at Kiwi price action highlights last week’s reversal off pitchfork resistance with the decline trading within a near-term descending channel off the highs. The immediate threat is lower while below the highlighted slope confluence around ~6890s with near-term bearish invalidation at the monthly open at 6915. Confluence support rests at 6810 backed closely by the 100% extension at 6783 and the 38.2% retracement at 6761 – both levels of interest for possible exhaustion / long-entries IF reached.

Bottom line: NZD/USD has responded to uptrend resistance and while the immediate threat is lower, ultimately the pullback may offer more favorable long-entries. From a trading standpoint, I’m targeting the median-line on this drop and we’ll be looking for reaction there for guidance. IF this pullback has deeper intentions, near-term advances should be capped by channel resistance.

NZD/USD TRADER SENTIMENT

NZD/USD Trader Positioning

  • A summary of IG Client Sentiment shows traders are net-short NZD/USD - the ratio stands at -1.32 (43.1% of traders are long) – weak bullish reading
  • Long positions are12.6% lower than yesterday and 5.4% higher from last week
  • Short positions are 7.1% lower than yesterday and 8.3% 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 & last week, and the combination of current positioning and recent changes gives us a stronger NZDUSD-bullish contrarian trading bias from a sentiment standpoint.

Disclosure: Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.