NZ Dollar false breakout

Well not all trades work out and this one certainly failed. The Kiwi only managed a small close above the head and shoulders pattern before reversing. That's why you have stops. Not all chart patterns come to fruition and I've had to admit defeat on this one. We await another formation. In hindsight I should have waited for more of a clearance on the breakout.

New Zealand Dollar breakout alert

The New Zealand dollar (Kiwi) has broken out upside ( triangle or Head and Shoulders pattern) with 85.80 now the target. Protective stops should be at 79.30.

New Zealand Dollar Breakout Watch

It's hard to tell if this is Triangle or a Head and Shoulders bottom formation. Either way we now have clear boundaries to watch for a break-out. The strength last week in the face of potentially damaging fall-out from the Fonterra (one of NZ's biggest exporters) China milk contamination scare was quite impressive and left the shorts scrambling to cover.

The momentum slowed a little towards the end of the week as the Kiwi approached the upper end of this formation.

A close above the 81.00 cent level would be an invitation to go long with a target of around 85.80.
Of course the other alternative is a resumption of the recent downtrend, and a close below 76.50 would suggest a move to the low 70's near 72.00 cents.

The patient will  wait for a breakout either way. I stress though a New York close outside the levels mentioned is needed. The Kiwi and Aussie have a history of making daytime breaks before closing back inside formations.