N.Z. Dollar Attempts to Form Double Bottom: Technical Analysis
Forex Trading Floors Academy brings up to date news from Bloomberg on The New Zealand Dollar.
New Zealand’s dollar is attempting to form a “double-bottom” trading pattern that may lay the groundwork for a 5 percent rally, according to Junichi Ishikawa, an analyst at IG Markets in Tokyo.
The currency has to climb past 80.34 U.S. cents, the high on Oct. 21, to confirm the formation, he said by phone today. The move would indicate that the currency will stay above the 23.6 percent retracement of its drop from this year’s high reached in July to its low touched this month, Ishikawa said. The retracement is near the bottom of a so-called Ichimoku cloud, which signals where sell orders may be clustered.
“On a weekly chart, 77 cents has been a very important support point over the past two years and the kiwi is again bouncing off the level,” Ishikawa said. “New Zealand’s dollar has broken the resistance line starting from the July high and is trying to form an irregular double bottom at about 77.”
New Zealand’s dollar gained 0.4 percent to 79.42 cents at 2:31 p.m. in Sydney from yesterday, advancing for a sixth day, set for the longest winning streak since May 6.
Should the double bottom be formed, the kiwi will target 83.70 cents, though the upside will probably be limited at the top of the Ichimoku cloud, according to Ishikawa. The currency will drop toward 77 toward the end of the year, he said.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency, or index.
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