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NZD/USD Forex Technical Analysis – Holding Fib Level at .6924 Could Trigger Rally into 50% Level at .7027

The New Zealand Dollar is edging higher on Monday after last week’s steep sell-off was fueled by the Fed’s surprise hawkish stance, which weighed on risk sentiment. Global equity markets are recovering from early session weakness that may be encouraging Kiwi short-sellers to take profits.

At 10:07 GMT, the NZD/USD is trading .6970, up 0.0040 or +0.58%.

Weaker Treasury yields are also helping to underpin the New Zealand Dollar. Additionally, analysts at Goldman Sachs agreed the dollar’s gains may not be sustained, noting other central banks will need to consider policy normalization too as their economies recover from the blow of the pandemic.

Daily NZD/USD
Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6823 will signal a resumption of the downtrend.

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The main trend will change to up on a move through .7316. This is highly unlikely, but due to the prolonged move down in terms of price and time, the NZD/USD may be ripe for a closing price reversal bottom.

The minor trend is also down. A trade through .7243 will change the minor trend to up. This will also shift momentum to the upside.

The NZD/USD is currently testing the lower level of a long-term retracement zone at .7027 to .6924.

The minor range is .7243 to .6923. Its 50% level at .7083 is the first potential upside target. Since the main trend is down, sellers could come in on the first test of this level.

The main range is .7316 to .6923. Its retracement zone at .7120 to .7166 is the best upside target zone.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD is likely to be determined by trader reaction to .6924.

Bearish Scenario

A sustained move under .6923 will indicate the presence of sellers. This could trigger a break into the November 23, 2020 main bottom at .6897. This is a potential trigger point for an acceleration to the downside with the November 11, 2020 main bottom at .6811 the next potential downside target.

Bullish Scenario

A sustained move over .6924 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the main 50% level at .7027. Sellers could come in on the first test of this level. Overcoming it, however, could trigger a surge into the minor pivot at .7083.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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