The New Zealand Dollar finished higher on Monday after posting a second consecutive closing price reversal bottom. The price action suggests aggressive counter-trend buyers are coming in on the dips to support the currency. If confirmed with a follow-through rally, we may see the start of a 2 to 3 day counter-trend rally.
On Monday, the NZD/USD settled at .6718, up 0.0011 or +0.16%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The main trend will change to up on a trade through .6912. A trade through .6692 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The nearest support area is a pair of 50% levels at .6717 and .6697. The NZD/USD has been straddling this area for the last seven sessions.
If .6692 fails as support then look for the selling to possibly extend into the next support zone, a pair of Fibonacci levels at .6658 and .6633.
On the upside, the first target is a 50% level at .6802, followed by another 50% level at .6831 and a Fibonacci level at .6864.
Daily Swing Chart Technical Forecast
Based on Monday’s close at .6718, the direction of the NZD/USD on Tuesday is likely to be determined by trader reaction to the 50% level at .6718.
A sustained move over .6718 will indicate the presence of buyers. The daily chart indicates there is plenty of room to the upside with .6802 the next major upside target.
A sustained move under .6717 will signal the presence of sellers. This could trigger a quick break into the next 50% level at .6697, followed by the closing price reversal bottom at .6692.
Taking out .6692 will indicate the return of sellers. If this move creates enough downside momentum, we could see a plunge into the first Fibonacci support at .6658, followed by the second Fibonacci level at .6636.
The Fib at .6636 is very important because the daily chart indicates there is plenty of room to the downside with the next major support the October 26 main bottom at .6465.
This article was originally posted on FX Empire
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