Friday, 02 June 2023 12:02 GMT

New Zealand Dollar Technical Forecast: NZD/USD Slams Into Support

(MENAFN- DailyFX) New Zealand Dollar Technical Price Outlook: NZD/USD Weekly Trade Levels

  • New Zealand Dollar updated technical trade levels - Weekly Chart
  • NZD/USD rebounds off technical support confluence- risk for near-term recovery
  • Resistance 6380, 6529/39, 6721/33 (key) – support 6196-6233 (key), 6099, 5928

The New Zealand Dollar rallied nearly 1% against the US Dollar since the start of the week with NZD/USD attempting to snap a seven-week losing streak that plunged Kiwi more than 11.4% off the yearly highs. A rebound off downtrend support leaves room for a possible recovery within the broader decline- looking for topside exhaustion in the days ahead. These are the updated targets and invalidation levels that matter on the NZD /USD weekly price chart. Review my latest Strategy Webinar for an in-depth breakdown of this Kiwitrade setup and more.

New Zealand Dollar Price Chart – NZD/USD Weekly

Chart Prepared by Michael Boutros , Technical Strategist; NZD/USD on Tradingview

Notes: The New Zealand Dollar rebounded off confluent support this week at 6196-6233- a region defined by the 2015 / 2019 lows and the 61.8% Fibonacci retracement of the 2020 advance. Note that the lower parallel of the descending pitchfork formation we've been tracking since last year also converges on this threshold and further highlights its technical significance. The focus is on this reversal with the threat of a near-term recovery within the broader downtrend- it may not last very long.

Initial resistance now at 6380 backed by the 38.2% retracement off the yearly range / the January low-close at 6529/39- an area of interest for possible topside exhaustion IF reached. Broader bearish invalidation set to the 61.8% retracement / 2020 yearly open at 6721/33. A break below this key support zone would likely unleash another accelerated bout of declines with such a scenario exposing the 100% extension of the 2021 decline at 6099- look for a larger reaction there IF reached.

Bottom line: The New-Zealand Dollar has responded to slope support and threatens a near-term recovery within the broader downtrend. From at trading standpoint, the focus is on a possible topside exhaustion on this stretch while below the median-line with a break / weekly close below 6196 needed to mark resumption of the broader downtrend. The economic docket is light this week so keep a close eye on broader market sentiment into the close.

For a complete breakdown of Michael's trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

New Zealand Dollar Trader Sentiment – NZD/USD Price Chart
  • A summary of IG Client Sentiment shows traders are net-long NZD/USD - the ratio stands at +2.52 (71.61% of traders are long) – typically bearish reading
  • Long positions are 1.20% higher than yesterday and 2.59% lower from last week
  • Short positions are 12.61% higher than yesterday and 6.94% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZD/USD prices may continue to fall. Traders are less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed NZD/USD trading bias from a sentiment standpoint.
New Zealand / US Economic Releases

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts
  • Gold (XAU/USD)
  • Crude Oil (WTI)
  • Canadian Dollar (USD/CAD)
  • British Pound (GBP/USD)
  • Australian Dollar (AUD/USD)
  • US Dollar Index (DXY)
  • Euro (EUR/USD)
  • S&P 500, Nasdaq, Dow

--- Written by Michael Boutros , Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex


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