The New Zealand Dollar drifted lower early Friday before closing higher. Volume and volatility were well-below average for fifth session due to the absence of the major players during this Christmas and New Year season. The lack of fresh domestic news contributed to the price action as well as year-end position-squaring.
On Friday, the NZD/USD settled at .6707, up 0.0006 or +0.09%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, momentum may have moved into a position to trend higher with the formation of the closing price reversal bottom on Friday.
A trade through .6912 will change the main trend to up. A move through Friday’s high at .6720 will confirm Friday’s closing price reversal bottom. This could lead to a 2 to 3 day counter-trend rally.
A move through .6692 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The NZD/USD closed inside a pair of 50% levels at .6697 to .6718 on Friday.
Additional support is a pair of Fibonacci levels at .6658 to .6633. On the upside, retracement zone resistance is layered at .6802, .6831 and .6864.
Daily Swing Chart Technical Forecast
Based on Friday’s price action and close at .6707, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the 50% levels at .6718 and .6697.
A sustained move over .6718 will indicate the presence of buyers. This is followed closely by Friday’s high at .6720. Taking out this level will confirm Friday’s closing price reversal bottom. If this move creates enough upside momentum, then look for a potential rally into the short-term 50% level at .6802 over the near-term.
The first sign of weakness on Monday will be a break under the 50% level at .6697. This is followed by Friday’s closing price reversal bottom at .6692. If sellers take out this level then look for a potential decline into the first Fibonacci level at .6658, further selling will extend this move into the next Fibonacci level at .6633.
The Fib at .6633 is the trigger point for a potential acceleration to the downside. The daily chart indicates there is plenty of room to the downside with the next major target the October 26 bottom at .6465.
This article was originally posted on FX Empire
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