Wednesday, May 23, 2018

NZD/CAD May Begin Rallying

On the H4 time frame there is a trend channel that the pair has broken out above (in dark blue), after which the rally reached the channel’s limit (which was 87 pips).

Then the pair developed a downward wedge (in red) and broke out above it.

The two figures together form a head and shoulders pattern.

Although the pair continues testing the breakout, I think that in the medium term it will continue developing to the upside. The limit of the wedge it broke out above is 64 pips, and if it reaches it we should see a rally to 0.8950.

That means that there will be a breakout of the head and shoulders figure and then a rally to the 38.2%, 50% and 62.8% Fibo of the entire depreciation from 0.95147 (14th  March 2018) to 0.87855 (17th May 2018).

And as a last argument in favour of the expected rally I’d point out the pin bar on the W1 time frame, which has closed above the support at 0.8830.