NZD/USD Forex Technical Analysis – Strengthens Over .7266, Weakens Under .7204

The New Zealand Dollar is trading marginally higher on Monday as traders try to recover from last week’s late sell-off. Earlier in the week, prices soared to their highest level since February 26 after the Reserve Bank (RBNZ) signaled an earlier than expected rate hike for next year. The Kiwi is currently on-track for a monthly gain of about 1.30%.

At 06:28 GMT, the NZD/USD is trading .7253, up 0.0006 or +0.08%.

In economic news, New Zealand business sentiment in May was higher than the April forecasts but dropped from a preliminary read earlier this month, an ANZ Bank survey showed on Monday.

The survey’s headline measure showed a net 1.8% of respondents expected the economy to improve over the year ahead, compared with a 7.0% optimism level in the preliminary May reading published about two weeks ago. But it was higher compared with a 2.0% pessimism level in the poll in April.

A net 27.1% of respondents expected their own businesses to grow in the next 12 months, from 22.2% last month.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7316 will signal a resumption of the uptrend. A move through .7135 will change the main trend to down.

The main range is .7465 to .6943. The NZD/USD is currently trading inside its retracement zone at .7204 to .7266. This zone is controlling the near-term direction of the Forex pair.

The minor range is .6943 to .7316. Its retracement zone at .7129 to .7085 is support.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the main Fibonacci level at .7266.

Bullish Scenario

Overcoming and sustained a move over .7266 will indicate the presence of buyers. If this move creates enough upside momentum then look for a potential surge into last week’s high at .7316. We’re going to need to see a pick-up in volume to make this move realistic.

Bearish Scenario

A sustained move under .7266 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the main 50% level at .7204. Since the main trend is up, buyers could come in on a test of this level. If this fails as support, we could see a spike to the downside over the short-term with the next potential target a support area at .7135 to .7129.