NZD/USD Forex Technical Analysis – Could Be Setting Up for Potentially Bearish Closing Price Reversal Top

The New Zealand Dollar is edging higher on Wednesday despite a stronger U.S. Dollar. The currency moved higher after Reserve Bank (RBNZ) Governor Adrian Orr said the central bank’s actions have been effective in broadly lowering interest rates.

Meanwhile, gains are likely being limited by a stronger U.S. Dollar, which is being underpinned by U.S. data that showed firm manufacturing activity. Economic data published on Tuesday showed U.S. manufacturing activity accelerated to a nearly two-year high in August amid a jump in new orders, with the reading from the Institute for Supply Management hitting the highest level since November 2018.

At 07:04 GMT, the NZD/USD is trading .6766, up 0.0007 or +0.11%.

“We have been effective in lowering interest rates across the board, and ensuring there is plentiful liquidity in the financial system,” Orr said in a speech delivered to the Victoria University School of Government and Policy Studies.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out Tuesday’s high.

A trade through the nearest swing bottom at .6489 will change the main trend to down. This is highly unlikely, however, due to the nine session rally, the NZD/USD begins today’s session inside the window of time for a potentially bearish closing price reversal top.

A closing price reversal top will not change the main trend to down, but if confirmed, it will shift momentum to the downside and it could trigger the start of a two-to-three day correction.

The new minor range is .6489 to .6789. Its retracement zone at .6639 to .6604 is a potential downside target.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the NZD/USD on Wednesday is likely to be determined by trader reaction to Tuesday’s close at .6760.

Bullish Scenario

A sustained move over .6760 will indicate the presence of buyers. The first target area is the intraday high at .6789 and the July 19, 2019 main top at .6791.

Overtaking .6791 could trigger the start of another acceleration to the upside with the March 21, 2019 main top at .6939 the next major upside target.

Bearish Scenario

A sustained move under .6760 will signal the presence of sellers. A close under this price will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction with a potential downside target .6639 – .6604.

For a look at all of today’s economic events, check out our economic calendar.