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It looks like there are still plenty of doubts about another BOC hike, and this long-term setup on NZD/CAD could be a prime candidate to play this bias.

Long NZD/CAD Idea

This pair appears to be gearing up for another strong bounce off its long-term rising channel support visible on the weekly (yes, weekly!) time frame. In fact, this uptrend has been holding all the way back to 2009!

NZD/CAD Weekly Forex Chart
NZD/CAD Weekly Forex Chart

If I squint my one good eye well enough, I can even spot a tiny inverse head and shoulders pattern right on the channel support. Stochastic is heading north, which suggests that buyers could stay on top of their game from here.

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

Zooming in to the 4-hour time frame shows that NZD/CAD is still testing the ceiling around .9025. A break higher could lead to nearly 300 pips in gains or the same height as the range, likely bringing enough upside momentum for a move closer to the larger channel resistance or mid-channel area of interest.

NAFTA jitters are drawing Loonie bears back in, spurring doubts about another BOC hike in the coming months. Keep in mind that policymakers emphasized that they’d be more cautious about future tightening moves since they’ve already hiked a couple of times last year.

It doesn’t help that the Loonie appears to be decoupling from crude oil price action once more, hinting that risk appetite and Canadian fundamentals carry more weight. Heck, if market watchers even start buzzing about an overheating oil market, it could lead to speculations that the OPEC might cut its output deal short!

On the flip side, the Kiwi has been able to hold its ground so far as positive reports from China could shore up demand for its commodity exports. The RBNZ hasn’t signaled a shift to a more hawkish stance, though, but the announcement of the new central bank head allowed Kiwi bulls to charge last month.

A strong break past the .9050 minor psychological level could confirm that another long-term rally is underway, probably taking the pair up to the next area of interest near .9300 or all the way up to the top of the channel closer to .9700.

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