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NZD/USD Forex Technical Analysis – Trading on Bullish Side of Major Retracement Zone at .6074 – .5958 – Yahoo Finance

The New Zealand Dollar surged on Tuesday as a bullish tone in global equities markets and stronger than expected domestic trade data drove buyers into higher-yielding currencies.

Global stocks rose as reopening economies and China stimulus expectations lifted investor sentiment. Positive progress towards a coronavirus vaccine also gave investor sentiment a lift.

Tuesday’s economic data showed New Zealand posted a record monthly trade surplus of $1.3 billion in April after imports sank 22 percent to $4 billion in the steepest decline since October 2009.

Imports would have been even lower but for $65 million worth of facemasks, up by $58 million on April 2019.

Exports also fell but by 4 percent to $5.3 billion, mainly because of a 69 percent fall in forestry products. The forestry industry was shut down through the lockdown while other primary exporters were able to continue operating.

Essentially, what made the Kiwi rally was the trade data with exports holding up well through the lockdown.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up when buyers took out a pair of main tops at .6156 and .6176. A trade through .5921 will change the main trend to down.

The main range is .6448 to .5469. The NZD/USD is currently trading on the bullish side of its retracement zone at .6074 to .5958. The fact that the Forex pair straddled this zone for nearly two months suggests that it is controlling the near-term direction of the currency. It is now support.

Daily Swing Chart Technical Forecast

The early tone of the NZD/USD on Wednesday is likely to be determined by trader reaction to Tuesday’s high at .6229.

Taking out .6229 will reaffirm the uptrend. If this move creates enough upside momentum then the rally should extend closer to its main objective, the March 9 main top at .6448.

The inability to take out .6229 may be a sign that Tuesday’s rally was fueled by short-covering rather than new buying. It may also indicate the selling is greater than the buying at current price levels.

Finally, taking out .6229 then turning lower for the session will put the NZD/USD in a position to form a potentially bearish closing price reversal top. If confirmed, this could lead to a 2 to 3 day correction.This article was originally posted on FX Empire

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