I spy with my one eye another good pullback opportunity on a comdoll cross pair! Here’s a simple short-term forex trend setup on NZD/CAD.
As you can see from the pair’s 1-hour forex chart below, price has been moving inside a descending channel for quite some time now. The bottom of the channel held as support, putting NZD/CAD on track to test the top, which lines up with a bunch of strong resistance levels.
For one, the channel resistance lines up with the 61.8% Fibonacci retracement level from the latest swing high and low. It also coincides with a former support area around the .9100 major psychological mark. Confluence, baby!
Price is stalling at the 50% Fib or .9050 minor psychological mark at the moment while stochastic is on the move down, but I’m inclined to wait for an actual test of the channel resistance and for reversal candlesticks to form before hopping in. After all, we’ve got the Canadian Ivey PMI report due later today so there might still be room for a pop higher.
The comdolls have been pretty tricky to trade these days since risk appetite has been supporting ’em all, but it looks like the Loonie could be on stronger footing compared to the Kiwi thanks to the recent rally in crude oil prices. Also, there’s talk of an RBNZ interest rate cut sometime this year while the BOC has expressed reluctance to ease further.
If I’m able to short around .9100, I’ll set my stop past the swing high of .9230 and my profit target at the bottom of the channel around .8850. I’ll be risking 0.5% of my account on this one so don’t forget to check out our risk disclosure and follow me on my social media accounts for quick updates!