Based on the early price action, the direction of the NZD/USD today is likely to be determined by trader reaction to the Fib level at .6833 and the 50% level at .6805. The main range is .6922 to .6688. Its retracement zone at .6805 to .6833 is currently being tested. This zone is controlling the longer-term direction of the Forex pair.
The New Zealand Dollar is trading lower early Tuesday. Traders are reacting to weaker-than-expected domestic data and a disappointing manufacturing report from China.
In New Zealand, Building Consents fell 7.6% versus a 6.9% previous report. ANZ Business Confidence was -44.9. Last month the report was -39.0.
In China, factory activity was slightly lower than expected in July, with the official manufacturing Purchasing Manager’s Index (PMI) coming in at 51.2. The Chinese manufacturing PMI had been forecast to fall to 51.3 in July from 51.5 in June, according to a poll of economists by Reuters. China’s official services PMI also fell in July. The report showed a reading of 54.0 from 55.0 in June.
New Zealand Dollar traders are now waiting for the Bank of Japan’s monetary policy decision.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top at .6851 on July 26. A trade through .6851 will negate the reversal top and signal a resumption of the uptrend.
The minor trend is down. This move also turned momentum down. The minor trend will reverse back to up on a trade through .6851. A trade through .6762 will signal the return of sellers.
The main range is .6922 to .6688. Its retracement zone at .6805 to .6833 is currently being tested. This zone is controlling the longer-term direction of the Forex pair.
The intermediate range is .6688 to .6859. Its 50% level at .6773 is support.
The short-term range is .6713 to .6851. Its Fibonacci level at .6766 is also support.
Daily Swing Chart Technical Forecast
Based on the early price action, the direction of the NZD/USD today is likely to be determined by trader reaction to the Fib level at .6833 and the 50% level at .6805.
Taking out and sustaining a rally over .6833 will indicate the presence of buyers. If this generates enough upside momentum then look for buyers to make a run at .6851 then .6859. Both moves will confirm the uptrend. A breakout over .6859 could trigger an acceleration to the upside. The daily chart indicates there is room to run with .6922 the next major target.
A failure to overcome .6833 will signal the presence of sellers. However, taking out .6805 is likely to trigger an acceleration to the downside with targets clustered at .6773, 6766 and .6762.
Basically, the next major move will be determined by trader reaction to the main retracement zone at .6805 to .6833.