Taking a scan through the currency pairs this weekend, our focal lens discovered NZDCAD to be ready for a potential correction higher. This, in fact, should provide an opportunity to fade the rally for more weakness ahead. The following is my daily NZDCAD technical analysis into 2017.
28 October, AtoZForex – On November 6th NZDCAD traded to its best levels since 1997. The rate, however, drifted lower after hitting a rocky place at the 0.9922 handle. The pattern formed since March 2014 is a head and shoulders continuation pattern but the November weekly reversals warn that the breakout to near 20-year highs is a ‘classic fakeout’. This pattern is prone to fail for a deeper decline.
Daily NZDCAD technical analysis
Taking a close look at the daily chart, a rising trend line connecting July (0.9548) and September (0.9730) high was seen to have capped the rally at the top of the channel, which continues to suggest that the immediate bias favors more weakness until a more constructive break above this trend line.
On the support side, a rising trend line connecting July (0.9080) to October low of (0.9298) was seen to have held prices decently until a recent break and retest of the trend line which propelled more weakness.
Currently, the price is being held by a confluence of support which includes a 50% Fibonacci retracement of the whole rally from April low to November high, a 200 Day moving average and of course a trendline linking the March of 0.589 low with May low of 0.8690 at 0.9240 region.
NZDCAD key level and trade ideas
As always, the key levels to watch in the course of the anticipated corrective rally is as pivotal as the price itself. Hence, this piece will be less useful if actionable levels are not well dished out so as to have us well positioned ahead of time.
Near time, I will watch for the resistance at 0.9491 and 0.9570 which also happens to be the 38.2% and 50% Fibonacci retracement of the recent high and low of 0.9922 and 0.9222 respectively for possible short entries. However, short-term traders could as well take advantage of the possible corrective bounce signal for an 180pips targets.
On this note, I wish everyone a prosperous new year.
What is your NZDCAD technical analysis and outlook into 2017? Share your view in the comments section below.