The New Zealand dollar is the top performer today, can it last?

Technical Analysis

Author: Adam Button | nzdusd

NZD/USD gains a half-cent

New Zealand consumer confidence fell 2.8% in a report earlier today but you wouldn't know it from the currency scorecard. The kiwi is up 56 pips today to 0.7139 in its largest one-day gain in three weeks.

The kiwi has been getting beaten up over the last month on election and political worries. Negotiations are continuing and there is no near-term expectations of a resolution.

That's the first reason why today's bounce is so suspect. The second is the chart.

This looks like a textbook head-and-shoulders pattern that broke down on the initial fall below 0.7130.

We're in the 'seller's remorse' phase here now and are getting a retest of the Aug 31 low and the 200-day moving average. If those levels hold in the day ahead, watch out for a renewed round of selling and slow fall down to the May lows.