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The RBNZ just cut interest rates by 0.25% as expected, giving NZD/CAD a chance to retrace from its ongoing climb. Here’s where I’m hoping to enter a long position.

NZD/CAD Trade Setup

The pair has been moving above a rising trend line since the middle of the year and just recently broke above a long-term ceiling around the .9600 handle.

Price has since moved to the .9900 mark before showing signs of a potential pullback.

Applying the Fib tool on the latest swing high and low on the 4-hour time frame reveals that the 61.8% Fib is closest to the trend line and is within the area of interest from .9550-.9600.

Stochastic is heading down from the overbought zone for now, which means that buyers might need to take a break for now.

NZD/CAD 4-hour Forex Chart
NZD/CAD 4-hour Forex Chart

Kiwi bulls might be patiently waiting to enter around the Fib levels so I’m gonna look out for a test of those support areas as well.

I’m bullish on the Kiwi because the latest batch of economic figures from New Zealand (jobs, GDT auctions) haven’t been all that bad, signaling that the economy may be turning a corner.

On the flip side, the Loonie is still under immense downside pressure due to the standstill among OPEC nations, hinting that they’re not likely to come up with an output deal later anytime soon.

Besides, data from Canada has been far from impressive, and the underlying weaknesses in their labor market could take its toll on consumer spending down the line.

Because of that, I’m thinking that this NZD/CAD uptrend would persist and I just have to be ready to hop in at bargain levels if the fundamental picture stays the same by then.

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