NZD/USD Technical ANALYSIS: BEARISH
- New Zealand Dollar testing key support after sliding to 11-year low
- Positive RSI divergence suggests that selling pressure may be ebbing
- Retail trader positioning studies offer mixed NZD/USD trading bias
The New Zealand Dollar has slumped to touch the lowest level in almost eleven years against its US counterpart. The currency is now testing support in the 0.6197-0.6245 area, a barrier marked by a bottom dating to August-September 2015.
Last week, it was noted that the appearance of positive RSI divergence warns of ebbing downside momentum. This may precede a period of sideways consolidation or even set the stage for a rebound before the dominant move lower is re-engaged.
Losses since then have only made the “price versus RSI” disparity appear more dramatic. Initial resistance is at 0.6479, with a daily close above that needed to begin neutralizing near-term selling pressure. The 0.6425-96 congestion region follows. Breaking support targets the 0.5914-0.6042 region next.
NZD/USD daily chart created using TradingView
NZD/USD TRADER SENTIMENT
Retail sentiment data shows 81.60% of traders are net-long, with the long–to–short ratio at 4.44 to 1. The number of traders net-long is 8.89% higher than yesterday and 13.95% higher from last week, while the net-short count is 22.37% higher than yesterday and 17.70% lower 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 less net-long than yesterday even though it is moresocompared with last week.This makes for a clouded sentiment-based outlook.
Recommended by Ilya Spivak
Improve your trading with IG Client Sentiment Data
NZD/USD TRADING RESOURCES:
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter