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NZD/USD Forex Technical Analysis – Short-Covering Rally Forms New Minor Bottom at .6564 but NZ Still Vulnerable

James Hyerczyk
Updated

The New Zealand Dollar is trading slightly higher early Tuesday as selling eased after the currency hit a two-and-a-half year low. None-the-less, investors remain nervous about Turkey’s financial crisis, which suggests the price action is likely being fueled by profit-taking and some light short-covering.

At 0303 GMT, the NZD/USD is trading .6601, up 0.0022 or +0.34%.

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Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The Forex pair is not in a position to change the trend, however, due to the prolonged move in terms of price and time, it is in the window of time for a closing price reversal bottom. The chart pattern works best if the bottom is reached inside a major retracement zone or at a support level, and at this time, I’m not sure we’ve even found support yet.

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A trade through .6564 will signal a resumption of the downtrend. The daily chart shows there is no support until the January 26, 2016 main bottom at .6346.

The minor trend is also down. However, the early price action on Tuesday has helped form a new minor bottom at .6564.

The major range is formed by the August 24, 2015 main bottom at .6207 and the July 27, 2017 main top at .7558. Its retracement zone at .6723 to .6882 is resistance.

Daily Swing Chart Technical Forecast

Since the NZD/USD begins the session in the window of time for a closing price reversal bottom, yesterday’s close at .6579 and yesterday’s low at .6564 are the key levels to watch today.

Right now, we’re looking at a minor bottom at .6564. However, if sellers can take out .6564 then close back above .6579 then we’ll be looking at a closing price reversal bottom. The type of bottom is more important than a closing price reversal bottom and often signals the start of a 2 to 3 day rally.

This article was originally posted on FX Empire

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