Nov. 23 (Bloomberg) -- The New Zealand dollar may extend its monthly decline against the yen and approach the two-year low reached in March, Gaitame.com Research Institute Ltd. said, citing trading patterns.
The so-called kiwi last week formed five-consecutive “colored bars” on its candlestick chart, suggesting a bearish trend, according to Takuya Kawabata, a researcher in Tokyo at the unit of Japan’s largest foreign-exchange margin company. Colored bars indicate the currency’s closing price was lower than the opening rate.
“If New Zealand’s dollar dips below the October low of 57.342, it certainly is possible for it to depreciate further to the 54 yen level,” Kawabata said.
The 6- and 20-day moving averages for the currency pair are both heading lower, which is another bearish indicator, according to Kawabata.
New Zealand’s dollar dropped to 54.81 yen on March 17, the lowest since April 2009, and traded at 57.63 yen as of 7:42 a.m. in Singapore. The kiwi has fallen 4.2 percent in the past month, according to Bloomberg Correlation-Weighted Currency Indexes, marking the sharpest decline among 10 developed-nation counterparts.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.
--With assistance from Masaki Kondo in Singapore. Editors: Rocky Swift, Naoto Hosoda
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