The New Zealand Dollar is under pressure on Friday after posting a potentially bearish closing price reversal top the previous session. The chart pattern doesn’t indicate a change in trend, but it does mean the selling is greater than the buying at current price levels.
The chart pattern was confirmed early Friday, which puts the currency in a position to post a 2 to 3 day correction or at least a 50% correction of the rally from November 2.
At 08:21 GMT, the NZD/USD is trading .6828, down 0.0011 or -0.16%.
The Kiwi is down from a 19-month peak reached on Thursday as investors dumped perceived riskier currencies on renewed worries about the health of the global economy. The currency is still up about 0.80% for the week and on track for its second consecutive gain as markets pared the chance of negative interest rates in the country.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum has shifted to the downside with the formation and subsequent confirmation of the closing price reversal top on Thursday.
A trade through .6915 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend changes to down on a move through .6589. This is highly unlikely but there is room for a normal 50% to 61.8% correction.
The short-term range is .6589 to .6915. Its 50% level at .6752 is the primary downside target. Since the main trend is up, buyers could come in on a test of this level.
Daily Swing Chart Technical Forecast
The break through yesterday’s low at .6835 confirmed the closing price reversal top. If this move creates enough downside momentum then look for the selling pressure to eventually extend into .6752.
If the buying is strong enough to overcome .6835 then look for a possible rally into a minor pivot at .6865.
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