The New Zealand Dollar is trading higher against the U.S. Dollar on Wednesday after the White House and Senate reached a deal on a coronavirus stimulus bill. The move came after lawmakers agreed on the massive $2 trillion fiscal stimulus. The news also helped the Kiwi recover from early session weakness.
At 07:22 GMT, the NZD/USD is trading .5876, up 0.0048 or +0.83%.
The NZD/USD was pressured early in the session after New Zealand declared a state of national emergency. With the number of coronavirus cases rising by 47 to 205 on Wednesday, the government was forced to make the move, which could last for at least seven days and weigh over the economy. The government also has the option to extend the lockdown if the outbreak doesn’t start to show signs of containment.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .5469 will signal a resumption of the downtrend. The main trend will change to up on a trade through .6448. This is not likely on Wednesday, but the Forex pair should complete a normal 50% to 61.8% retracement of the last break.
The short-term range is .6448 to .5469. Its retracement zone at .5959 to .6074 is the primary upside target. Since the main trend is down, look for sellers on the first test of this area.
Daily Technical Forecast
Based on the early price action and the current price at .5876, the direction of the NZD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the steep uptrending Gann angle at .5789.
A sustained move over the uptrending Gann angle at .5789 will indicate the presence of buyers. This could lead to a test of the resistance cluster at .5959 to .5968. Look for sellers on a test of this area.
Overtaking .5968 will indicate the buying is getting stronger with the next potential target the Fibonacci level at .6074.
A sustained move under .5789 will signal the presence of sellers. This could trigger a steep plunge into the next uptrending Gann angle at .5629.
Trader reaction to the pullback will be very important to the chart pattern because aggressive counter-trend buyers will be coming in to try to form a secondary higher bottom.
This article was originally posted on FX Empire
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