The New Zealand Dollar is inching higher early Thursday after posting steep losses the two previous sessions. The move isn’t indicative of anything important and is probably more reflective of low volume ahead of the European and U.S. Forex openings.
The Kiwi is expected to continue to struggle to regain its footing after a huge surge in the greenback took out major support levels and a slew of sell stops.
At 04:43 GMT, the NZD/USD is trading .6877, up 0.0011 or +0.17%.
Concerns over growth in the global economy have combined with the prospect of early tapering by the Federal Reserve, and some other central banks, to sour global risk sentiment and benefit the safe-haven U.S. Dollar.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6860 will signal a resumption of the downtrend.
The main trend will change to up on a trade through .7157. This is highly unlikely. However, due to the prolonged move down in terms of price and time, today’s session begins with the NZD/USD inside the window of time for a closing price reversal bottom.
The minor trend is also down. A trade through .7093 will change the minor trend to up. This will also shift momentum to the upside.
The nearest resistance is a long-term Fibonacci level at .6924. This is followed by a short-term 50% level at .6988.
Daily Swing Chart Technical Forecast
The direction of the NZD/USD on Thursday is likely to be determined by trader reaction to .6865.
A sustained move over .6865 will indicate the presence of buyers. If this move creates enough upside momentum, we could see a short-covering rally into .6924. Sellers could come in on the first test of this level. Overcoming it will indicate the short-covering is getting stronger.
A sustained move under .6865 will signal the presence of sellers. Taking out Wednesday’s low at .6860 will indicate the selling is getting stronger. This could trigger an acceleration into the August 20 main bottom at .6806.
Closing Price Reversal Bottom Formation
Taking out .6860 then closing over .6865 will form a closing price reversal bottom. This won’t change the trend, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend rally.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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