The New Zealand Dollar is trading higher on Friday, while testing a critical retracement level on the daily chart that could determine the near-term direction of the currency. Fundamentally, the Kiwi is getting a boost from China’s strong manufacturing PMI number from earlier in the week and talk of fiscal stimulus from the New Zealand government. A weaker U.S. Dollar is also underpinning the Kiwi as well as steady demand for higher-yielding currencies.
At 11:02 GMT, the NZD/USD is trading .6568, up 0.0021 or +0.33%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out yesterday’s high.
The main trend will change to down on a trade through .6395. This is highly unlikely today, but the NZD/USD is up nine sessions from its last main bottom, which puts it in a position to post a potentially bearish closing price reversal top.
This chart pattern won’t indicate a change in trend, but it could lead to the start of a 2 to 3 day correction.
The main range is .6791 to .6204. The NZD/USD is currently trading inside its retracement zone at .6497 to .6567. This zone is controlling the near-term direction of Forex pair.
Daily Technical Forecast
Based on the early price action and the current price at .6568, the direction of the NZD/USD on Friday is likely to be determined by trader reaction to the Fibonacci level at .6567.
A sustained move over .6567 will indicate the presence of buyers. Overtaking the steep uptrending Gann angle at .6575 will indicate the buying is getting stronger. This could lead to a test of the minor top at .6588. This price is a potential trigger point for an acceleration to the upside with the first target angle coming in at .6666.
A sustained move under .6567 will signal the presence of sellers. The first downside target is a downtrending Gann angle at .6541. This is a potential trigger point for an acceleration to the downside with the next target the 50% level at .6497.
A close under .6547 will form a closing price reversal top. If confirmed on Monday, this could lead to the start of a 2 to 3 day correction.
This article was originally posted on FX Empire