Let’s start off with the USDCAD 1-hour chart. Did you see that descending triangle formation? Well, the pair just broke below the bottom of the triangle, breaching support around the 1.0660 area. From then on, the pair went on to dip to a low of 1.0598 before bouncing back up. If the pair continues to edge higher, it could encounter resistance at the former support level around 1.0660. On the other hand, if it resumes its downward motion, it could break below the psychological 1.0600 mark, which is just a few pips above its previous low.
Let me give you an update of the AUDUSD chart that I drew yesterday. As you can see, the pair remains stuck just below the downtrend line and the 61.8% Fibonacci retracement level. The pair could head lower any time soon given the market’s overbought condition. If and when it does, its likely downside target would be this month’s low at 0.8578. On the other hand, the pair could thread higher and reach 0.8900 if risk appetite returns.
Now, let’s take at look at the price movement of its little cousin, the NZDUSD. If you notice, the NZDUSD’s chart is almost like a carbon copy of the AUDUSD’s. Well, the rationale behind this is that New Zealand’s economy is closely tied to Australia. Also, both the Aussie and the Kiwi have a strong correlation with gold. So going back, the NZDUSD could be heading lower since the stochastics are already in the overbought area. Bias remains to be to the downside given its current downtrend. The pair could find some support at this month’s low just above 0.6800 if it continues to weaken. Though, it could still reach the resistance at 0.7000 before doing so. However, if for some reason the pair breaks above 0.7000, then it’s possible for it to climb all the way up to 0.7150.