The bruised and battered New Zealand Dollar is trading slightly lower late Thursday in a low volume session due to the U.S. Thanksgiving holiday. If it weren’t for the absence of the major U.S. banks, this week’s mass liquidation probably would’ve continue with the currency hovering just above major support and another three-month low.
At 20:06 GMT, the NZD/USD is trading .6858, down 0.0015 or -0.21%.
After drifting lower since October 21, heavy selling hit the Kiwi early Wednesday after the Reserve Bank of New Zealand (RBNZ) announced a disappointing 25 basis point rate hike. The move was met by distain from traders because ahead of the move the market was pricing in a 40% chance of a 50 basis point rate hike.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending lower since the confirmation of the closing price reversal top on October 21.
A trade through .6806 will change the main trend to down. A move through .7219 will negate the closing price reversal top and signal a resumption of the uptrend. This is highly unlikely but due to the prolonged move down in terms of price and time, the NZD/USD will begin Friday’s session inside the window of time for a closing price reversal bottom.
The minor trend is also down. A trade through .7053 will change the minor trend to up. This will also shift momentum to the upside.
The minor range is .7053 to .6840. Its 50% level or pivot at .6947 is the nearest resistance.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD into the close on Thursday is likely to be determined by trader reaction to .6873.
A sustained move under .6873 will indicate the presence of sellers. Taking out the intraday low at .6840 will indicate the selling pressure is getting stronger. This could trigger a further decline into the August 20 main bottom at .6806.
The main bottom at .6806 is also the low of the year. Watch for a technical bounce on the first test of this level, but if it fails then look for the start of an acceleration to the downside with the November 2, 2020 main bottom at .6589 the next major target.
A sustained move over .6873 will signal the presence of buyers. Taking out .6894 will indicate the short-covering is getting stronger.
A close over .6873 will form a potentially bullish closing price reversal bottom. If confirmed, this move will shift momentum to the upside. This could trigger the start of a 2 to 3 day counter-trend rally with .6947 the next likely upside target.