Technical Outlook:Kiwi broke above its monthly opening range this week after testing critical support at 6828 on building bullish divergence. The rebound is now approaching structural resistance at the upper median-line parallel extending off the yearly highs. Note that the 100-day moving average is also in this region and may cap the advance near-term. The focus is on this resistance barrier heading into the close of the week.
Notes: A closer look at price action highlights confluence resistance targets at 7073 & 7097– Both regions of interest for near-term exhaustion. A breach above this zone is needed to mark a more meaningful reversal is underway in Kiwi with such a scenario targeting the 200-day moving average at ~7113 backed by the 61.8% retracement at 7162.
Interim support rests at 6986 with the near-term focus weighted to the topside while above 6950. Bottom line: the immediate focus is on a possible near-term exhaustion high here to offer a pullback- ultimately to get long. Added caution is warranted as we head into the extended holiday weekend with the second read on US 1Q GDP tomorrow morning likely to fuel increased volatility in the USD crosses.
- A summary of IG Client Sentimentshows traders are net-short NZDUSD- the ratio stands at -1.17 (46.0% of traders are long)- weak bullish reading
- Long positions are 9.7% lower than yesterday and 20.6% lower from last week
- Short positions are 0.4% higher than yesterday and 19.0% higher from last week
- There’s been a marked increase in short exposure with the pullback in ration now approaching extremes not seen since February. That said, while the sentiment does continue point higher here the immediate topside bias remains vulnerable, especially as price approaches structural resistance.
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– Written by Michael Boutros, Currency Strategist with DailyFX