NZD/USD Forex Technical Analysis – Main Trend Down, Taking Out .6611 Changes Minor Trend to Up

The New Zealand Dollar is trading lower early Wednesday after hitting its lowest level since February 2016. Risk aversion is the theme as traders shrugged off reports that Turkey’s finance minister would protect its currency which has been in a freefall for the past week.

At 0205, the NZD/USD is trading .6562, down 0.0037 or -0.56%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed early Wednesday when sellers took out Monday’s low at .6564.

The NZD/USD is in no position to change the main trend to up, but it is in the window of time for a closing price reversal bottom. Due to the prolonged move down in terms of price and time, and the Forex pair’s current position on the charts, there is no support. Therefore, it’s likely to make its own support when the news about Turkey changes. This means you should be looking for a chart pattern that signals a bottom like a closing price reversal bottom and not a support level. The best pattern to watch for in this situation is the closing price reversal bottom.

Daily Technical Forecast

Now that the NZD/USD has posted a lower-lower, the number to watch all day is yesterday’s close at .6574.

A sustained move under .6574 will indicate the presence of sellers. A sustained move under .6564 will indicate the selling is getting stronger. If this move creates enough downside momentum, we could overtime, see an eventual move into the January 26, 2016 main bottom at .6346.

Overcoming the previous low at .6564 will be the first sign that the selling pressure is slowing, crossing to the strong side of a downtrending Gann angle at .6571 will indicate the short-covering is getting stronger. Turning higher over .6574 will put the NZD/USD in a position to form a potentially bullish closing price reversal bottom.

Taking out .6611 will change the minor trend to up and this will also shift momentum to the upside with the next targets coming in at .6711 and .6723.

For trend traders, continue to play for an eventual move to .6346. For aggressive counter-trend traders, watch for a closing price reversal bottom and stop buying weakness while trying to pick a bottom. We’re going through a news driven event. This means you’re going to have to time your buy with a change in the news and that’s too hard to do.