We’re making this week’s crosses watch a Loonie special since Canada has got a couple top tier economic reports coming out…check it out!
A couple of weeks ago, EUR/CAD made the watchlist on a textbook bearish channel pattern. That pattern held and is still going strong now at the end of February, and it looks like the market is about to retest the top of the descending channel.
The odds seem pretty good that sellers may take the trade once again, given that this area is a major psychological level (1.5000) and has held as resistance over the past two weeks, while the stochastic indicator is nearly signalling overbought conditions.
But keep in mind though that Canada is releasing updates on consumer inflation and GDP, so it might be a good idea to also be open to an upside break of top of the channel if the data comes out super bearish for the Loonie.
For you Loonie bears out there, GBP/CAD is developing an upside breakout scenario on the four hour chart as swing lows have been trending higher while resistance has been steadily holding just under 1.7300 in February.
If there is an upside breakout, the next resistance area isn’t seen until the major swing highs around the 1.7500, so this pair has room to run without speed bumps if the the right catalysts come along for both the British pound and the Canadian dollar, especially on positive Brexit development surprises!
Last but not least, we’ve got a simple “broken-support-turned-resistance” setup on NZD/CAD with the market nearly retesting a major area of interest. We can see on the four hour chart above that the 0.9100 area was a major support level until broken at the end of 2018. Since then, it’s been test twice by the bulls, and both times held like a champ and reversed NZD/CAD lower to a newly formed support area between 0.8900 – 0.8950.
Stochastic is currently signaling overbought conditions, so the next thing to look out for if you’re a Loonie bull is for resistance and/or bearish patterns when NZD/CAD hits 0.9100. This could come soon, not only with a busy Canadian calendar ahead, but New Zealand could see some action as well with its upcoming trade balance data and ANZ business confidence survey data coming this week. Again, with news events coming soon, be flexible with your directional biases because depending on the outcome, that broken-support-turned-resistance area around 0.9100 could easily reverse and become broken-resistance-turned-support!