Don’t look now, but we’ve got a neat break-and-retest situation goin’ on right here with NZD/CAD! Is it time to hop in this textbook setup?
Long NZD/CAD Idea
I’ve had my one good eye on this pair for quite some time now as it recently bounced a super long-term ascending channel support on its weekly time frame. At that time, I was still holding out for an upside break from the .9000 major psychological level and range resistance.
A few days back, bulls finally gained enough energy to push past this strong barrier to take price up to a high of .9173 before pulling back. Applying the handy-dandy Fib tool on the swing low and high on the 4-hour chart shows that the 50% level lines up with the area of interest and a short-term trend line.
At the same time, stochastic is pulling up from the oversold region to indicate that buyers are ready to jump back in. If the support areas keep losses in check, NZD/CAD could make it all the way up to the swing high and beyond!
There’s not much in the way of top-tier data from both New Zealand and Canada this week, though. This suggests that the focus could remain on NAFTA talks, which had positive developments last time I checked, and overall market sentiment.
Earlier today, New Zealand reported stronger than expected trade figures as it reported surplus of 640 million NZD versus the estimated 127 million NZD shortfall. Underlying data revealed that both imports and exports ticked higher, but the impressive 26% increase in the latter drove the headline reading to its best level since March 2015.
Canada’s monthly GDP figure is due later on, but this doesn’t usually spur a huge reaction from the currency. Leading inflation indicators such as the RMPI and IPPI are also lined up.
I’m thinking of going long at market with a stop below the trend line and Fibs and a target at the next major area of interest closer to .9300, but I’ll trail my stop slightly above entry once price tests the swing high. Care to share your thoughts?
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