Not a lot ahead to spark short-term volatility, so we’re going to check out NZD/CAD as the pair rests a strong area of interest for a potential reversal play.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on USD/JPY for consolidation breakout potential, so be sure to check that out to see if there is still a potential play!
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 9520.46 -1.86% FTSE: 5477.52 +0.58% S&P 500: 2440.86 -0.26% DJIA: 20881.22 +0.85% |
US 10-yr 0.803% -0.015 Bund 10-YR -0.313% +0.01 UK 10-YR: 0.436% -0.04 JPN 10-YR: 0.024% -0.029 |
Oil: 23.45 -2.33% Gold: 1640.20 -1.24% Bitcoin: 6626.46 -2.58% Etherium: 135.57 -3.15% |
Fresh Market Headlines & Economic Data:
- White House and Senate strike a deal on historic $2 trillion coronavirus stimulus bill
- U.S. durable goods orders increase solidly before coronavirus
- FHFA House Price Index Up 0.3% in January; Up 5.2% from Last Year
- Swiss National Bank sets up covid-19 refinancing facility
- Swiss National Bank Quarterly Bulletin released
- Euro zone mulls 2% of GDP credit from bailout fund to fight coronavirus
- German business morale slumps to lowest since 2009: Ifo
- UK inflation falls off six-month high as fuel prices drop
- UK parliament set to close for at least four weeks on Wednesday
- UK house price growth slowed in January: ONS
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Japan Foreign investment & Services PPI at 11:50 pm GMT
What to Watch: NZD/CAD
We’re checking out a simple technical setup for the session as the outlook for strong market biases have faded a bit with an empty calendar ahead and the passing of the massive U.S. stimulus bill behind us. On the one hour chart of NZD/CAD above, we can see the pair has been on a steady rally higher from the strong support around 0.8100 to now test previously strong resistance around the 0.8450 handle. And it looks like the bears have already jumped back on the pair with resistance not only holding once again, but the market turning lower quickly to trade back below 0.8400.
For you NZD/CAD bears out there, especially the aggressive ones, shorting at current levels to target the swing lows (around 0.8100) while using the daily ATR (around 170 pips) as the stop guide does create a favorable short-term potential return-on-risk trade that could close out at target by the end of the week if all goes well. For the more conservative, waiting for another retest of the 0.8450 handle does create a better potential return-on-risk, but you are taking on the risk of potentially missing out on a reversal move lower.
For the NZD/CAD bulls out there, again no catalysts for a strong upside break can be see ahead, but if we do get fresh news bullish for the pair (e.g., fall in oil prices, extremely negative Canadian updates, etc.), then a break of the strong resistance area around 0.8450 does warrant a closer look for a potential short-term long position. The next major resistance area is just under the 0.8700 handle, so targeting there with the daily ATR as a stop guide does create a solid potential return-on-risk.