Blackwell Global | Nov 14, 2013 04:48AM ET
Over the last month, forecasts for the NZ economy have been optimistic and for the most part these forecasts have been wrong and the NZ economy has exceeded expectations.
Overall, I like a good head and shoulders pattern and this is certainly one of them, but in this case, your typical plunge after forming the pattern is not there. The only viable way I can see it happening is if the Australian dollar plunges further and drags on the kiwi. Nevertheless though, markets will reach a point where they will jump back into the kiwi, forcing it back up in light of the recent economic news and positive investor sentiment. If anything, it’s likely the kiwi may indeed range further rather than plunge, as the conflict between the AUD dragging on us and the New Zealand economic situation remaining strong will lead to a stand off for the currency as the USD waits on tapering comments.
If one were to take anything away from this, it is that yes, technicals are effective for trading, but when they don’t matchup with fundamentals, do trade cautiously.
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