It looks like I’m seeing a lot of potential long-term forex plays on the comdolls these days! Aside from the ones I’ve shared in my Comdoll Trading Kit this week, I’m also watching this reversal pattern on NZD/CAD’s daily chart.
As you can see below, the pair has been able to complete a double bottom pattern with a neckline around the .8850 minor psychological mark. Price seems to be breaking above this resistance level already, confirming that an uptrend is about to take place.
Now this chart formation is approximately 500 pips tall so the resulting rally could last by the same number of pips. I don’t mind waiting for a bit more confirmation that an upside break has taken place before hopping in, as this week’s catalysts from New Zealand and Canada could provide more clues on where this pair is headed next.
From New Zealand, we’ve got another Global Dairy Trade auction coming up, and this should show if the pickup in the dairy industry is gaining traction. Canada has the BOC interest rate decision lined up tomorrow and downbeat remarks could spur a stronger Loonie selloff. After that, we’ve got Canada’s retail sales figures and CPI readings due Thursday and Friday respectively.
Apart from the drag coming from falling oil prices, the Canadian dollar also seems to be trailing the U.S. dollar when it comes to giving up ground against its forex rivals. That’s not so surprising since BOC Governor Poloz usually emphasizes how the recovery in the Canadian economy is supported by Uncle Sam, and it’s just too bad that the latter is hitting more than a few road bumps lately.
I’ve got my eyes locked on a wide potential entry area around .8850 to .8950, and I’ll probably set a 200-pip stop then go for a target of 400-600 pips, depending on how the economic events turn out. Do you think I’ve got the right bias on this one?
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