Another diverse set of currency crosses thrown on the watchlist for what should be a busy forex calendar this week!
First up is what could be an upside breakout pattern forming on the four hour chart of CAD/JPY. After a surge lower in mid-March, the pair bottomed out around 81.60 before finding buyers for a strong end of March rally. The pair is back to retesting a major area of resistance around the 84.00, forming a quasi ascending triangle along the way with higher lows.
Volatility could be coming this week for the Loonie with a heavy economic calendar for Canada (CPI, trade and retail sales updates) and the oil markets could be a heavy influence too with OPEC and Russia potentially ditching their deal. An upside break looks like smooth sailing with a lack of recent resistance levels above 84.00 to likely draw in sellers and on the downside, a break of the rising lows could draw in sellers down to that previous swing low and beyond, especially on a combination of weak oil prices and disappointing Canadian economic data.
GBP/AUD has marched steadily higher since the end of 2018, but recently met with unbreakable resistance around the 1.8700 – 1.8800 area in March. The pair has fallen back in April, now breaking the rising ‘lows’ pattern, potentially signaling to the market that the bears are ready to take back control.
So far the break has been pretty weak, so we’re not convinced of a turn yet, but this week’s market drivers should make it clear or not that GBP/AUD is ready to turn. From the U.K., the employment and inflation reports are top tier events that should draw in traders, while Australia’s own employment update and China’s GDP update should easily bring volatility to the Aussie.
EUR/NZD recently broke above a falling ‘highs’ pattern at the beginning of April and it looks like are sticking with it as there really hasn’t been a pullback at all. For all you bold traders out there, going long at current levels is something to consider given the strength, but keep in mind there’s potential euro market movers this week in the form of the latest manufacturing and services PMI data from Europe on Thursday.
Given the weak economic data trend we’ve seen lately, it might be a good idea to be a little more prudent, making a pullback to the broken lower ‘highs’ pattern a better price to enter at. This also lines up with the 1.6600 handle that was a very strong resistance area throughout March. Now that it’s broken, it could draw in the bulls on another retest, especially if stochastic is back in oversold territory.