In yesterday’s intraday charts update, the pair was just below the 0.7300 major psychological level. And our main setup back then was to wait for the pair to test the channel’s support area so that we can go long. However, I also told y’all that 0.7300 is a price area with very significant market interest, even on the higher time frames. There was therefore also a chance that them bears would use 0.7300 to stage a downside channel breakout. And as y’all can see, the pair apparently followed our secondary scenario.
NZD/CAD moved lower for over 60 pips from the breakout point above the 0.7230 handle. The pair finally found support at 0.7170, which is one of the price levels we marked yesterday. And since the pair is pulling back, we might as well have a pullback scenario for today’s play. Anyhow, the pair is about to reach the 38.2% Fibonacci retracement level. And interestingly enough, the 38.2% retracement level happens to line up rather nicely with the 0.7230 handle. If our pullback scenario plays out as intended, then them bears would likely be gunning for 0.7310 next and then 0.7060 after that. Stochastic is already signaling overbought conditions and all that, though, so there’s a chance that them bears may start kicking the pair lower without reaching our pullback area. Oh, just be ready to bail or switch bias if the pair goes above the 61.8% retracement level, since that means that them bulls are trying to push the pair back into the channel.
Lookin’ for something fresh? Well, that there symmetrical-ish triangle pattern for CAD/CHF is certified 100% fresh, homie. A symmetrical-ish triangle pattern means that bulls and bears are tryin’ to bum rush each other. However, neither side has a real advantage (for now), so a breakout in either direction is possible. As such, we don’t really have a trading bias on the pair. Y’all may therefore wanna prepare for both an upside breakout and a downside breakout. You get my drift, dawg?
And if a breakout does occur, then the resulting breakout move could potentially last for around 200 pips, based on the height of the forex chart pattern. Just keep an eye on 0.7700 (for an upside break) and 0.7520 (for a downside break), since a break ain’t confirmed until and unless the pair smashes through those price levels with decent momentum. If the pair fails to do that, then there’s a good chance that the breakout may end up as a fakeout, so you can’t chillax till then. In any case, just make sure to practice proper risk management, a’ight?
Forex Chart Settings:
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.