The NZD was one of the better performers in May, surging from the 0.68 lows to 0.72 key level. The CAD on the other hand had mixed sentiments. While the CAD enjoyed some good fundamentals, oversupply of crude oil and the Qatar issue had an adverse effect on the CAD. From mid April, NZDCAD has rallied over 500 pips from 0.92 lows to 0.9750 high. As price nears a multi year key resistance level, a bearish NZDCAD harmonic setup has emerged. Let's see the possible 500 pip sell-off that may emerge on NZDCAD.
12 June, AtoZForex – Last week's action saw price rally above the 0.9650 key level for the first time in 2017. Prior to this, that level had held bulls several times as the supply level held. Late last year though, price broke past the 0.9650 key level for the first time in over one decade. Thereafter, price rallied almost 200 pips to the 0.98 handle. From there, an aggressive sell off saw price crash 500 pips over the next trading sessions.
The current rally has brought price within striking distance of the 0.98 level. Even though the 2016 high for NZDCAD is 0.9920, the supply zone begins from the 0.9800 psychological level.
NZDCAD Harmonic setup D1 Chart (click to zoom)
As price currently trades close to the key resistance level, a bearish harmonic setup has emerged on both the Daily and Weekly charts.
NZDCAD Harmonic Setup: A short-term top could be approaching
It is important to note that we remain in an uptrend. From the Daily chart to the Monthly, price has kept forming higher highs, thus indicating that the upmarket is in tact. However a possible dip to the 0.92 region seems very likely.
NZDCAD Harmonic Setup D1 Chart (click to zoom)
The Daily chart has formed a bearish shark pattern. The pattern begun forming late February and completed last Friday at 0.9750. Price may still push up towards the 0.98/ 0.9850 level. From there, a sell off is more likely.
NZDCAD Harmonic Setup W1 Chart (click to zoom)
Interestingly, the Weekly chart has also formed a bearish cypher pattern. This gives further credence of a sell-off once price reaches the key level resistance.
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