The New Zealand Dollar posted a wicked outside move on the weekly chart before closing higher last week. The currency started flat-to-lower as investors began pricing in a potential rate cut by the Reserve Bank of New Zealand (RBA) on November 13. However, the Kiwi mounted a quick turnaround rally after Westpac Bank announced an about face and was no longer calling for a rate cut. This triggered an impressive short-covering rally.
Last week, the NZD/USD settled at .6428, up 0.0078 or +1.23%.
The Kiwi was further boosted after the U.S. Federal Reserve trimmed its benchmark interest rate by 25 basis points as expected, while signaling it would take a pause in December. Traders also shed hedge positions in the U.S. Dollar as the U.S. and China moved closer to finalizing a partial trade deal.
Weekly Technical Analysis
The main trend is up according to the weekly swing chart. The main trend turned up last week when buyers took out the previous main top at .6451. The main trend will change to down if .6204 fails as support.
The minor trend is up. The minor trend will change to down on a move through .6333. This will also shift momentum to the downside.
The main range is .6791 to .6204. Its retracement zone at .6498 to .6567 is the primary upside target. Sellers could come in on the first test of this zone.
Weekly Technical Forecast
Based on last week’s price action and the close at .6428, the direction of the NZD/USD this week is likely to be determined by trader reaction to the uptrending Gann angle at .6404.
A sustained move over .6404 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the downtrending Gann angle at .6471. Sellers could come in on the first test of this angle, but taking it out could trigger an acceleration to the upside with the 50% level at .6498 the next likely target.
We could see sellers on the first test of .6498, but overtaking it will indicate the buying is getting stronger. This is a potential trigger point for an acceleration to the upside with the next target the Fibonacci level at .6567.
The inability to overcome the downtrending Gann angle at .6471 will signal the presence of sellers. This could trigger a break into the uptrending Gann angle at .6404.
If .6404 fails as support then look for a potential acceleration to the downside with the first target the minor bottom at .6333 and the second the uptrending Gann angle at .6304.
This article was originally posted on FX Empire
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