Kiwi bulls and Kiwi bears are playing tug-of-war on NZD/CAD’s 1-hour forex chart, but both sides seem to be equally matched. The resulting price action has resulted in a pretty obvious symmetrical triangle. And since it’s a symmetrical triangle, we don’t really have a directional bias, so we’re anticipating a breakout in either direction. The moving averages are still in uptrend mode, though, so the path of least resistance seems to be to the upside. That may change, however, since the moving averages are coming closer together for a potential cross-over into downtrend mode. In any case, if the forex chart pattern does break, then the resulting rally or sell-off could have enough momentum for a 150-pip move since that is roughly the height of the triangle.
After breaking out of a well-respected ascending channel that we identified last Thursday, price began to move convincing bearish momentum before finding support at the 1.4600 major psychological level. Now, price is making its way back up, giving us a convenient break-and-retest setup. Applying the Fibonacci tool, the most conservative pullback area seems to be the 50% retracement level due to the following technical arguments: (1) it sits right smack on the 1.4800 major psychological level, (2) the 1.4800 level is a price area of very significant market interest, (2) the 50% retracement level is very close to the bottom of the broken channel, and (4) the 100 SMA could potentially act as dynamic resistance. The only worrying thing is that stochastic is already in overbought territory, so sellers may be enticed to start coming in.
Price smashed through the bottom of the trading range or rectangle that we found last Monday, but it later found buyers at the 1.7150 minor psychological level, causing the sellers to retreat. Price is currently making its way back to the bottom of the rectangle at around 1.7370, which happens to fall between the 38.2% and 50% Fibonacci retracement levels. Looking at out technical indicators, the moving averages are indicating a clear downtrend, which confirms our directional bias to the downside. Stochastic is already in overbought territory, though, so forex traders bullish on the pair may potentially be exhausted already. In any case, make sure to practice proper risk management should you find a trade based on this or any of the other charts, okay?
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.AUD/CAD 1-hour Forex Chart