This week we’re focusing on the Loonie with Canadian elections and economic data ahead. Here are both bull and bear setups to check out, as well as a setup on EUR/AUD ahead of the ECB meeting.
First, we’ve got this beautiful technical setup on NZD/CAD, which recently bounce from a strong support area around 0.8250 and is now retesting a falling ‘highs’ pattern, as well as a strong level of interest (0.8400). The stochastic is signaling potential short-term overbought conditions, so if you’re bullish on the Canadian dollar ahead of the Canadian election results, as well as Canadian retail sales data this week, this may be the cleanest technical setup at the moment.
For those who are bearish on the Canadian dollar ahead of this week’s events, you might want to check out CAD/JPY. According to MarketMilk, CAD/JPY is pretty overbought in the very short-term, which could me the current rally higher may be running out of steam. We can see that the pair is also testing previous resistance areas on the daily chart (82.50 – 83.50), so any reversal patterns here over the next week or so will likely draw in technical sellers, especially if overall global risk sentiment sours.
Outside of the Loonie pairs, we the price action in EUR/AUD is pretty interesting. Over the course of October, the pair has been ranging in-between the 1.6200 – 1.6400 handles, with a slight bullish lean if you look back to early September. With stochastic signaling potential oversold conditions short-term, bullish reversal patterns from current levels down to 1.6150 should sound the alarm for a potential long position.
Just keep in mind though that the euro does have top tier catalysts ahead in the form of the ECB monetary policy meeting. If that event turns out to be a bearish one for the euro, then the pattern to watch is for a bearish breakdown of the rising ‘lows’ and 1.6200 major psychological level for a short position.