My short entry just got triggered! But while the technicals are looking neat, I’m worried that fundamentals are suggesting a possible upside breakout. What do you guys think?
As I’ve mentioned in my initial trade idea, I’m seeing a bearish divergence and a test of the channel resistance around the 61.8% Fib. This lines up with a former support area which might hold as resistance from here.
I was able to get in a short position at .8825 so I’ve got my stop past the swing high and .9000 major psychological resistance. I’m aiming for the previous lows near the .8600 handle as my initial profit target but I’m willing to keep part of my position open until the channel support is tested, depending on how data turns out.
Earlier in the week, reports from New Zealand came in mixed, as the GDT auction showed a 1.4% drop in dairy prices but the quarterly employment change beat expectations. The unemployment rate rose from 5.4% to 5.7% but this was mostly a result of a growing labor force.
As for the Loonie, the forest fires in Alberta aren’t doing the currency any favors at the moment, as this could worsen economic activity and employment in the oil-dependent province. Then again, the shutdown of some oil projects in the area could weigh on global supply and provide some support for prices, which could then lift the positively-correlated Canadian dollar.
Looking ahead, Canada still has its employment report on tap for Friday and according to Forex Gump’s preview, we might be in for an upside surprise. If not, I’ll be ready to close this trade early if the actual figure comes in below the 0.2K consensus or if the jobless rate surges past 7.2%.
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