Is there a chance that USD/CAD could go lower? Well, since a rising wedge has formed on its 1-hour chart, there’s a better-than-average chance that the pair may move lower. And if a downside break does happen, then the resulting selloff may potentially move lower for about 390 pips, based on the height of the chart pattern. A downside breakout seems unlikely at this point, however, since stochastic is currently indicating oversold conditions.
After finding out that support at the 1.6710 handle is very well-defended and milling about in that area for a while, the pair began climbing higher until it reached the previous support area at the 1.7150 minor psychological level, which may serve as resistance given that it lines up rather nicely with the 50% Fibonacci retracement level. Another good sign for our bearish bias is that stochastic is already pointing down and moving away from overbought territory. The only thing worth worrying about is that price has been closing above both the 100 and 200 SMA, since it implies strong bullish interest. So make sure to practice proper risk management, okay?
Reversal alert! A small double top pattern is beginning to form on NZD/CAD’s 1-hour chart, so make sure to keep a close eye for opportunities to short if you’re bearish, or for warning signs to abandon ship if you’re bullish. If the pattern is validated by a downside break past the neckline at 0.9460, then the pair may have momentum for a 70-pip move. Be careful, though, since the neckline at 0.9460 is a price area with very significant market interest, even on the higher time frames, so it could also serve as a launching pad for a swing higher.
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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.