NZD/USD Forex Technical Analysis – Break Through .6212 Main Bottom Puts .6061 on Radar

The New Zealand Dollar is under pressure for a fifth straight session early Friday with the selling fueled by a plethora of issues including lower commodity prices, worries over a global recession and expectations of aggressive rate hikes by the Federal Reserve.

At 05:34 GMT, the NZD/USD is trading .6230, down 0.0027 or -0.43%.

The selling started this week when China released weak economic data and lowered its benchmark interest rate. This broke the Yuan, putting pressure on commodity prices. The weak economic data raised red flags about a global recession.

The Kiwi was further pressured when a Reserve Bank of New Zealand (RBNZ) interest rate hike and hawkish monetary policy statement failed to trigger a rally. Finally, on Thursday, a couple of Federal Reserve officials made statement calling for a supersized 75-basis-point rate hike in September.

All of the selling this week has put the NZD/USD on the brink of collapse with its July bottom at .6061 the next major target.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6212 will change the main trend to down. A move through .6469 will signal a resumption of the uptrend.

The major support is the long-term Fibonacci level at .6231. The nearest resistance is a short-term 50% level at .6265, followed by a minor 50% level at .6341.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term Fibonacci level at .6231 is likely to determine the direction of the NZD/USD on Friday.

Bearish Scenario

A sustained move under .6231 will indicate the presence of sellers. The first downside target is a main bottom at .6212.

The selling pressure could start to increase under .6212 with a change in the main trend. Taking out sell stops under minor bottoms at .6192, .6185 and .6141 will contribute to the acceleration into the July 14 main bottom at .6061.

Bullish Scenario

A sustained move over .6232 will signal the presence of buyers. The first target is .6265. Overcoming this level could trigger a short-covering rally into the minor pivot at .6341.