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Double Top Formation Weighs On The Kiwi

KIWI

Given the relatively thin news flow and in-line Kiwi trade data, NZD depreciation this morning may be underpinned by technicals. Although NZD/USD printed a fresh multi-month high on Sep 18, it finished the day charting a shooting star candlestick pattern, heralding a sharp sell-off that came to fruition this week. NZD/USD slid smoothly through a trendline support drawn off the Mar 19 YtD low and then through the 50-DMA. Further losses allowed the rate to cleanly breach support from Sep 9 low/round figure of $0.6601/00, resulting in the formation of a double top pattern and suggesting that a broader bearish reversal might be in play. A break below the 100-DMA, intersecting at the next round figure of $0.6500, and Aug 20 low/23.6% retracement of the YtD range at $0.6489/85 would confirm that bears are now in the driving seat.

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