AUDNZD - Five Year Lows

[ynot]

If interest rates are reduced we will see 0.90 . Dairy price and inflation figures also contributing.

[Hoop]

With regard to the classic "head and shoulders pattern" forming here.
It is starting to look that way but is such a pattern able to predict the direction of this trade ?

Ynot..The H&S pattern is the most reliable of all the chart patterns, so basically yes ,,,the predictability is high..
First of all the NZ$VA$ H&S pattern is still forming..It has to be completely formed (established) before one can stat assessing the probabilities of an outcome..... The H&S pattern is established when it reaches its already formed neckline again..So the NZ$ has to fall to its neckline which is about 0.86 atm.

The predictability is very high if NZ$ breaks its neckline (H&S pattern established) it has only a 4% failure rate of not falling 5% below the neckline line break..There's a 54% failure rate at the -20% (Bulkowski)...so as you can see with the chart below if there is a neckline line break at say 0.86c then there is a 46% chance that the price will exceed below 0.69c.

see http://thepatternsite.com/hst.html#HST0

As Winner rightly points out the currency is a reflection of the economic health of its country, so a fall to < 0.69 would indicate some sort of economic collapse that could occur to a much lesser degree in Australia..

If one assumes that the currency will not go lower than 0.86 by June then the same assumption would apply that the H&S pattern will not established...

The downward sloping neckline is a worry in that a H&S pattern does not have to established with a long slow decline to say 0.86 by Xmas 2016...however if there is a neckline break, it would indicate a good chance "happening" the NZ economy would experience a sudden slump.

The good scenario is that the NZ$ could keep wavering around its 0.88 - 0.95 and the H&S pattern fails to become established..or better still break parity.



The chart below has dotted line Target price..I wondered if to include it,,but I did anyway...This dotted line is line in the sand using probabilities of a "happening" and is highly significant (85% chance the dotted line will be reached if the neckline is broken)..the TP dotted line is not a support or resistance line therefore it should have no effect on the outcome of the NZ$ price..

EDIT: chart error..Primary Support 0.95 should read Primary Resistance 0.95

[JBmurc]

Dairy prices fall for fourth time in a row at GlobalDairyTrade auction

http://www.nzherald.co.nz/business/n...ectid=11590485

pipe dream that NZD will stay strong .... once this housing bubble pops ...biggest exports getting smashed ....back to the 80's soon enough
will be looking to transver more funds into AUD soon enough

[ynot]

The .86 neckline target is getting closer. What do you guys think the odds are of the Kiwi breaking this level ?

[JBmurc]

Very likely .. IMHO parity was pure pipe dream......and when you at a long term chart 1998-2016 there is clearly a head and shoulders pattern developed last few years ....so BEARISH outlook over the long term
high 70's bottom out 2017-18 my pick

Glad to have brought more AUD recently

[Entrep]

Very likely .. IMHO parity was pure pipe dream......and when you at a long term chart 1998-2016 there is clearly a head and shoulders pattern developed last few years ....so BEARISH outlook over the long term
high 70's bottom out 2017-18 my pick

Glad to have brought more AUD recently

Yup, been holding my AUD since I started this thread back in December 2013... LOL

[Hoop]

I try not take too much notice with TA forward projections ...but if FAers can do it with forward PE's and earnings..then so can TAers..
Usually both FA and TA forward analysis come to grief at some point and the blame falls on the so-called "unexpected" events whereas the blame should really fall on the analyst doing the unreliable things with their disciplines... whether its TA or FA it doesn't matter..

But I can't resist myself.....
Why?....
1..The 25 year chart shows the NZ$ v A$ as in a cyclical currency relationship
2..The cyclical oscillation is near symmetrical...implying that if NZ/Ausralia relationships remain similar as they have done in the past, the future prediction should be very reliable.
3..The classic Head and Shoulder pattern is the most reliable of all chart patterns.
4...Past Head and shoulder patterns have worked and their predicted target points were accurate enough..

As I'm a believer that a high currency shows a better economy.. then that assumption + the chart below suggests the NZ economic future performance will be below that of it's Aussi Neighbor for the next 4 years...So the greener pastures will once again be over the ditch...

As an NZ investor the chart implies that my Equity portfolio should contain a decreasing NZ exposure..Any Multi Currency Trading account money could be better off in Aussi cash rather than NZ cash...

[JBmurc]

Great work Hoop.... will also be putting more funds into AUD ...2020 be a great time to bring the funds back to NZD....if all goes to plan with my ASX picks I'm hoping it will be a good amount

[winner69]

Hoops - interesting you should do some predicting, esp taking a currency chart and extrapolating a possible outcome to foretell how 2 economies are going to do

Lets see how this turns out eh - "As I'm a believer that a high currency shows a better economy.. then that assumption + the chart below suggests the NZ economic future performance will be below that of it's Aussi Neighbor for the next 4 years...So the greener pastures will once again be over the ditch..."

Interesting TA v FA

I think NZ will still have stronger growth than Aust - ie NZ$ will recover ........but if the Chinese start building big time again and want more iron than a tumble in the nz$ v au$ is likely (your head and shoulders pattern playing out)

[Valuegrowth]

I agree with Hoop. NZD not only could drop against AUD but also against majority of currencies which include USD. Despite some depreciation still AUD and NZD are two of the most overvalued currencies in the world.

In the short run there could be some support for both AUD and NZD while having volatility. However, as we haven’t seen strong phase Of USD yet we can expect further fall in currencies such as AUD and NZD most probably during second half of 2016 and in 2017/18. I expect bigger fall in both AUD and NZD in 2017/18.

In addition, I believe just like Euro we should see single currency in New Zealand and Australia as well. This will eliminate not only fluctuation risks and exchange costs but also will lead to closer co-operation between two countries.

Some of the benefits of the single currency are:

• Greater security and more opportunities for businesses and markets
• Improved economic stability and growth

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.