NZDUSD Analysis. The New Zealand Dollar broke through congestion range support and looks to have resumed the down trend started in early February against its US counterpart. The currency has now sunk to challenge levels unseen in almost 11 months.
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NZDUSD Technical Analysis: Down Trend Back in Play
Kiwi Dollar down trend resumes after congestion range support break
Risk/reward, positioning considerations argue against taking up trade
The New Zealand Dollar broke through congestion range support and looks to have resumed the down trend started in early February against its US counterpart. The currency has now sunk to challenge levels unseen in almost 11 months.
A daily close below the 50% Fibonacci expansion at 0.6847 opens the door for a challenge of the 61.8% level at 0.6790. Alternatively, a reversal back above the resistance cluster in the 0.6890-0.6918 area (March 9 low, 38.2% Fib, trend line) paves the way for a test of the 23.6% expansion at 0.6975.
Prices are too close to immediate support to justify entering a short position from a risk/reward perspective. Furthermore, a compelling trade structure – particularly, a clear invalidation point – seems absent. With that in mind, opting the sidelines seems most prudent.
NZDUSD Trendline is Near .6780
NZDUSD might be trading in a triangle from the March low (circled). The implication would be for a bit more sideways trading before a break to the downside that proves false (moves from triangles are often associated with terminal moves).
” No triangle…Kiwi simply broke down. Pay attention to the 2015-2016 trendline near .6780. Strength through the latest high at .7090 is needed in order to suggest something bullish.
Current New Zealand Dollar thoughts are mixed. How NZDUSD has responded to parallel supports twice in the last month (March 9, 10, 14 and April 10, 12) and commitments of traders data (COT) indicates the most extreme ownership profile since July 2015 (large speculative short position and large commercial long position).
The support reactions and COT position indicate that Kiwi is in a position to accept an advance but the timing is unclear. Price can stay low and carve a base for a bit longer. If price takes out .7090 (3/21 high) then time for the Bird to fly. Until then, range is the name of the game…probably between .7040 and .6950.
NZDUSD Analysis, Setup Chart H4 & Signals 02-05-2017