The New Zealand Dollar is trading nearly flat early Friday as investors await the release of the U.S. Non-Farm Payrolls report, due to be released at 12:30 GMT. Nonetheless, the Kiwi is in a position to post its first weekly gain since the week-ending July 19. Helping to put the low in this week and trigger the first rally of the week was weaker-than-expected ISM US Manufacturing PMI data. A rise in yields on government bonds also helped underpin the currency.
At 02:32 GMT, the NZD/USD settled at .6382, up 0.0007 or +0.11%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at .6269 on September 3.
The NZD/USD isn’t close to turning the main trend to up, but there is room for a correction into a minor retracement zone. A trade through .6269 will negate the chart pattern and signal a resumption of the downtrend.
The minor trend is also down. A trade through .6588 will change the minor trend to up. This will confirm the shift in momentum.
The minor range is .6588 to .6269. Its retracement zone at .6429 to .6466 is the next upside target. Since the main trend is down, sellers are likely to come in on a test of this area.
The main range is .6791 to .6269. Its retracement zone at .6530 to .6592 is the primary upside target.
Daily Technical Forecast
Based on the early price action and Thursday’s close at .6375, the direction of the NZD/USD on Friday is likely to be determined by trader reaction to the uptrending Gann angle at .6389.
A sustained move under .6389 will indicate the presence of sellers. If this generates enough downside momentum then a pair of uptrending angles at .6329 and .6299 become potential targets. The latter is the last potential support before the .6269 main bottom.
A sustained move over .6389 will signal the presence of buyers. This could create the upside momentum needed to challenge the minor 50% level at .6429 and the downtrending Gann angle at .6441. Watch for sellers on a test of this levels.
We’re still bearish on the New Zealand Dollar, but we’re willing to concede the need for a short-covering rally just to alleviate the excessive downside pressure. According to recent CFTC data, hedge funds were holding large short-positions.
This article was originally posted on FX Empire
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