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NZD/USD Forex Technical Analysis – Daily Trend Changed to Up on Friday

James Hyerczyk

The New Zealand Dollar finished higher on Friday after U.S. Federal Reserve Chairman Jerome Powell softened his tone on further interest rate hikes later this year. Speaking to the American Economic Association on Friday, Powell made several remarks which indicated that the Fed is prepared to alter policy expectations quickly and flexibly. Although his comments triggered a surge in U.S. Treasury yields, they were primarily perceived as dovish, which weighed on the U.S. Dollar.

On Friday, the NZD/USD settled at .6736, up 0.0044 or +0.65%.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Friday when buyers took out the previous swing top at .6726. The new main bottom at .6591 is also a closing price reversal bottom. This typically leads to the start of a 2 to 3 day rally, equal to at least 50% to 61.8% of a previous break.

On the downside, the nearest support is a pair of 50% levels at .6717 and .6697, followed by a pair of 61.8% levels at .6658 and .6633.

The short-term range is .6912 to .6591. Its retracement zone at .6752 to .6789 is the first upside target.

The main range is .6970 to .6591. Its retracement zone at .6781 to .6852 is the second upside target.

Combining the two retracement zones creates a tight resistance cluster at .6781 to .6789. Aggressive counter-trend sellers are likely to come in on a test of this area.

Daily Swing Chart Technical Forecast

Based on last week’s price action and the close at .6736, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the short-term 50% level at .6752.

Bullish Scenario

Taking out and sustaining a rally over .6752 will indicate the presence of buyers. This could trigger a surge into the resistance cluster at .6781 to .6789.

Bearish Scenario

A sustained move under .6752 will signal the presence of sellers. If this move creates enough downside momentum then look for a possible break into the pair of 50% levels at .6717 and .6697.

This article was originally posted on FX Empire