NZD/USD Price Forecast: Testing top of range and attempting to breakout
- NZD/USD is repeatedly pushing up against the ceiling of a range it began in the spring.
- A break above the August 20 high would form a higher high and confirm a breakout from the range.
- Such a move would be expected to lead to substantial upside follow-through.
NZD/USD continues knocking on the ceiling of the sideways range it established since the springtime. A break above the August 20 high would probably confirm an upside breakout with substantial gains expected thereafter.
NZD/USD Daily Chart
The pair temporarily breached the ceiling of its range on August 20 when it rose up to a high of 0.6248 before rapidly falling back down and forming a bearish Gravestone Doji candlestick in the process. This was followed by a red down candle which would have been expected to indicate further near-term weakness, however, the pair fell on a few points down to the 0.6109 August 22 swing low.
NZD/USD has since recovered and continues testing the range ceiling.
A break above the 0.6248 August 20 highs would signal a decisive breakout from the confines of the range. Such a move would then activate an upside target, calculated by taking the 0.618 ratio of the height of the range and extrapolating it higher. This would give an upside target of 0.6448 (bold rectangle). Another, more conservative target lies at 0.6409 (December 2023 high).
Such a move would probably also change the short-term trend from sideways to bullish.
A break below the 0.6109 swing low (August 23 low), however, would reconfirm the sideways trend as intact. This would probably then see the pair move back down towards the range floor at around 0.5850.
Author
Joaquin Monfort
FXStreet
Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.
