Plenty of trends among the crosses lately so we’ll highlight a few with potential for volatility to rise with top tier events ahead.
The Canadian dollar is likely one of the top movers this week with the Bank of Canada giving their latest monetary policy statement this week. Check out the link for Pip Diddy’s preview on the event, an if you’re feeling bullish on the Loonie after doing your own fundies work, then NZD/CAD might be the pair to check out when you’re ready to take on some risk.
On the four hour chart above, we can see that the pair has been in a steady downtrend over the last month but the last few sessions seems to have draw in the bull at the moment. This has brought the market up to the falling ‘highs’ pattern, an area worth putting on the watchlist to see if reversal patterns will form this week. We can also see the stochastic signalling potentially overbought conditions in the short-term, which has correlated with short-term tops the last few rallies in the downtrend.
If you’re a bear on CAD ahead of the top tier economic events from Canada this week, then CAD/CHF should go on the watchlist as this pair too has held in a downtrend steadily in recent weeks. The Swiss franc has managed to be relatively stronger than the rest of the majors thanks to risk aversion sentiment, and if you’re in the camp that geopolitical tensions will continue along with a dovish BOC this week, then CAD/ CHF is definitely for you.
On the four hour chart above, the pair just bounced from making new lows around 0.7435 after finding resistance around 100 pips higher (a potential resistance area we spotted last week). The market is currently testing the 38% Fib retracement area and finding a little bit of resistance, but with the stochastic not yet in overbought territory, there could be a little bit more movement higher. Look out for resistance/reversals for now as the trend is still a friend to the bears ahead of top tier events ahead.
AUD/JPY is all about the bears this past month thanks to a combination of global fears rising to support the yen and likely on bearish sentiment for the Aussie on rate cut speculation and China trade war fears. But in the last few sessions, it looks like the bears have run out of steam as the pair has been stuck in a range between 75.40 – 76.40 over the last couple of weeks.
A breakout is the likely next scenario to play out with top tier Australian and Chinese data ahead this week, so for the bulls look for a break and retest of the 76.50 area and surprisingly strong data before hopping on the wagon for a long play, especially given that the pair is in a strong downtrend. For the bears, the trend is your friend, and if we see weak economic data from Australia and/or China, that 75.40 area is likely to fold as support like a knife through butter. In that scenario, momentum could pick up quickly to extend the longer-term downtrend to the next potential support area around the major psychological level of 75.00