NZD/USD DAILY PRICE CHART

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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

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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

• 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.