Nov. 9 (Bloomberg) -- The Australian dollar may climb further versus its New Zealand counterpart after it breached a key Fibonacci retracement level, acccording to Credit Suisse Group AG.
The so-called Aussie may approach the 61.8 percent retracement of its decline from July to October after it rose above the 50 percent level, analysts led by London-based David Sneddon, Credit Suisse’s head of technical analysis research, wrote in a report yesterday.
The Australian currency’s strength “has already removed with ease the 50 percent retracement barrier,” the analysts wrote. “This should reinforce the bullish Australian dollar outlook.”
The Aussie was at NZ$1.2770 as of 12:08 p.m. in Sydney, little changed from yesterday’s close in New York. It earlier touched NZ$1.2792, the strongest since Sept. 10.
It climbed as high as NZ$1.2778 yesterday, surpassing NZ$1.2726, the 50 percent retracement of its decline from a high of NZ$1.3080 on July 25 to a low of NZ$1.2372 on Oct. 2, according to data compiled by Bloomberg. Its 61.8 percent level stands at NZ$1.2810 and was last seen on Sept. 7, when the currency climbed to as much as NZ$1.2882, the data show.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance, as levels where there may be sell orders clustered are known, indicates it may advance to the next level.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index.
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