With the RBNZ keeping the door open for rate cuts and with crude oil prices on the rise, I’m looking at this simple NZD/CAD trend play for my trade this week. On the pair’s 4-hour time frame, I’m seeing a long-term descending channel and price is about to test the resistance once more.
The top of the channel lines up with a former support area and the 61.8% Fibonacci retracement level so it might be strong enough to keep further gains in check. To top it off, a bearish divergence has formed with price making lower highs and stochastic showing higher highs.
New Zealand has a couple of event risks lined up later today and these are the bi-weekly GDT auction and the quarterly jobs release. Hiring is expected to be up by 0.6% versus the previous 0.9% increase while the unemployment rate could climb from 5.3% to 5.5%, which might be enough to bring rate cut speculations back on the table and allow NZD/CAD to resume its selloff.
Here’s my plan:
Short NZD/CAD at .8825, stop loss at .9025, profit target at .8625 for a simple 1:1 short-term trade. I’ll be risking 0.5% of my account on this setup so make sure you look at our risk disclosure if you’re gonna follow me!
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