NZD/USD Technical ANALYSIS: BEARISH
- New Zealand Dollar rebound struggling at 2020 channel midline
- Overall technical setup agues for a bearish NZD/USD trend bias
- Retail trader sentiment studies offer mixed directional guidance
The New Zealand Dollar is struggling to extend higher after last week’s spirited recovery against its US counterpart. Prices are now idling near the midline of the downward-sloping channel guiding them lower since the beginning of the year, waiting for a fresh catalyst to animate momentum.
On balance, the bounds of that decline as well as the longer-term descent started in July 2017 remain intact. That argues for a broadly bearish bias. A daily close below the 0.6322-36 zone may reinvigorate sellers, setting the stage for a test of the August-September 2015 bottom in the 0.6197-0.6245 area.
Alternatively, establishing a foothold above the six-week channel top – now at 0.6516 – may neutralize immediate selling pressure and set the stage for another test of structural resistance (currently at 0.6680). Overcoming that seems like a prerequisite to lasting upside follow-through.
NZD/USD daily chart created using TradingView
NZD/USD TRADER SENTIMENT
Retail trader data shows 61.71% of traders are net-long with the ratio of traders long to short at 1.61 to 1. The number of traders net-long is 1.10% higher than yesterday and 5.43% higher from last week, while the number of traders net-short is 1.29% lower than yesterday and 7.51% higher from last week.
IG Client Sentiment(IGCS) is typically used as a contrarian indicator, soretail traders being net-long suggests NZD/USD may continue to fall. However, positioningis more net-long than yesterday but less socompared with last week.This makes for an inconclusive sentiment-based directional bias.
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NZD/USD TRADING RESOURCES:
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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