NZD/USD Forex Technical Analysis – Downside Momentum Targets Main Bottom at .6753

The New Zealand Dollar plunged on Friday as investors reacted to bearish economic news from China. The news sparked selling in global equity markets which led to the aggressive selling of risky currencies. Furthermore, it drove investors into the safe-haven U.S. Dollar. The catalysts behind the selling was the news that China’s retail sales grew in November at their slowest pace since 2003 and industrial output rose the least in nearly three years.

On Friday, the NZD/USD settled at .6799, down 0.0057 or -0.84%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend changed to down last week when sellers took out the previous main bottom at .6841. The next downside target is the November 27 main bottom at .6753. A trade through .6912 will change the main trend to up. This is followed by the December 4 main top at .6970.

The short-term range is .6753 to .6970. Closing below its 50% level or pivot at .6862 is another sign of weakness. This level is new resistance.

The intermediate range is .6465 to .6970. Its retracement zone at .6717 to .6658 is the first downside target.

The main range is .6424 to .6970. Its retracement zone at .6697 to .6633 is the second downside target.

Combining the two retracement zones creates a 50% price cluster at .6717 to .6697 and a 61.8% price cluster at .6658 to .6633.

Daily Swing Chart Technical Forecast

Based on the weak close near the low of the session, we’re expecting the downside momentum to continue on Monday. We could see some counter-trend buying due to position-squaring ahead of the Fed’s interest rate and monetary policy decisions on Wednesday as well as Thursday’s New Zealand GDP report. However, these events are not likely to lead to a change in trend to up.

If the downside momentum continues then look for sellers to drive the NZD/USD into the main bottom at .6753. If this price fails then look for the selling to extend into the pair of 50% levels at .6717 and .6697. Profit-takers could should up on a test of this area.

On the upside, the first resistance is .6862, followed by the main top at .6912.