The New Zealand Dollar has rallied more than 5.5% off the yearly lows with the advance now targeting up-trend resistance. Here are the updated targets and invalidation levels that matter on the NZD/USD charts this week.
NZD/USD DAILY PRICE CHART
Technical Outlook: Last month we highlighted the threat of a major breakout in NZD/USD as price was testing yearly downtrend resistance. Kiwi ripped higher into the start of November trade with the advance now targeting pitchfork resistance of the ascending formation we’ve been tracking off the September / October lows. Key daily support rests at the 6700/15 zone (tested yesterday) with a breach above 6850 needed to fuel the next leg higher in price.
NZD/USD 240MIN PRICE CHART
Notes: A closer look at price action shows NZD/USD trading towards the upper bounds of the ascending slope formation with resistance targets unchanged at 6811 and 6851 – a breach/close above this threshold would be needed to keep the long-bias viable with such a scenario targeting the 200-day moving average at ~6894 and the 50% retracement of the yearly range at 6930.
Initial support rests with the October slope-line (red) backed closely by near-term bullish invalidation at the weekly opening-range lows at 7700/05– weakness beyond this level would shift the focus back towards the lower parallels with initial support objectives eyed at the 38.2% retracement at 6665 and 6619/24 – both areas of interest of possible exhaustion / long-entries. Broader bullish invalidation rests at 6573.
Bottom line: NZDUSD has broken multi-month slope resistance and although the broader outlook remains constructive, the advance may be vulnerable near-term while below the upper parallel. From a trading standpoint a good place to reduce long-exposure / raise protective stops. A break below the median-line would likely fuel a larger correction and more favorable entries towards structural support. For now, look for a reaction / exhaustion on this rally towards 6850.
