I’ve already got a short Kiwi position on my account but I can’t help noticing this potential downtrend pullback on NZD/CAD. Take a look!
NZD/CAD Trade Setup
Price is trending lower on its 1-hour time frame, moving inside a descending channel pattern. Right now, the pair is hovering around the bottom of the channel, which appears to be holding as a floor and allowing a correction to take place.
The Fib retracement tool shows that the 61.8% level lines up with an area of interest and the top of the channel at the .9450 minor psychological resistance. Stochastic is still on the move up to show that buyers are in control of price action at the moment, but selling pressure could return once the oscillator turns down from the overbought region.
I’m bearish on the Kiwi mostly because of RBNZ rate cut expectations, which were reinforced by Assistant Governor McDermott’s remarks on how Q3 inflation is expected to be low. He added that “further policy easing will be required” in order to bring inflation closer to the middle of their target range.
On the other hand, the Loonie has been taking advantage of the rally in crude oil prices, spurred by stronger speculations of an output deal from the OPEC. Another informal gathering is scheduled this week but they’re unlikely to announce an actual agreement until their official meeting in November 30. If price does pull up to the top of the channel, I’ll be waiting for reversal candlesticks before deciding to hop in.
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See also: Q2 2016 Trading Performance Review
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