We got another round of potentially volatile catalysts for the Loonie and Kiwi this week, making these textbook trend setups ones to watch on NZD/JPY, AUD/CAD, and CAD/JPY this week.
Right around the corner we’ve got a top tier catalyst to rock the Kiwi in the the form of New Zealand’s quarterly employment report. Jobs updates tend to be market moving events, and if this updates sticks with the weaker trend, then it could be a bad week for the New Zealand dollar. And Kiwi news is all we have to watch out for this pair this week due to Japan being on holiday until May 7, so no Japanese catalysts to worry about for now.
For those of you looking to go bearish on the Kiwi, NZD/JPY has quite a few price action arguments for a short play, including a broken-support-turned-resistance area being tested, which also happens to be a major psychological area (75.00) AND it lines up with the Fibonacci retracement area for the latest swing move from 76.00 down to 73.60. The stochastic indicator is signalling potentially overbought short-term conditions, so from a purely technical standpoint, the odds are pretty good the bears may be ready to jump in between 74.50 – 75.00. Look for bearish patterns there if the fundies make sense.
Canadian dollar related catalysts may be the big driver for this pair with the monthly GDP update and Bank of Canada Governor Stephen Poloz speaking this week. If they do get the Loonie moving, then this channel breakdown is definitely one to throw onto the watchlist this week.
As we can see in the four hour chart above, AUD/CAD just broke below the rising channel patterned that stretched all the way back to Feb. We did get a bounce higher not too long after the break, and it already looks like the bulls are meeting resistance at the major area of interest around the 0.9500 major psychological handle and the bottom of the rising channel. The stochastic is signalling potentially overbought short-term conditions, and when all put together, this looks like another textbook price action setup that could be ready to go live soon if Canadian events play nice.
For those of you who think the Canadian updates will be bearish for the Loonie, then CAD/JPY is the market to check out as its price action is forming a similar pattern to NZD/JPY above. After a strong swing move lower from roughly 84.00 to 82.60, the pair has bounced higher to a broken support area and Fibonacci retracement area. We’ve also got a signal from the stochastic indicator of potentially overbought conditions, so it’s probably a good idea to start looking out for bearish reversal patterns between 83.00 – 83.50 before playing the pair to the downside. With the next swing low around 81.60 and a daily ATR of between 50 – 60 pips, a trade plan could be made with a very good potential return-on-risk if the Loonie takes a hit in the next few days.