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.

NZD/CAD Tried Breaking above 0.9600 - 0.9650 for a Fourth Time

In a previous post of mine I described the interesting and rarely seen situation>>>  when there is a fourth attempt to break above a strong resistance level (on the weekly and monthly time frame), which proved in vain, at least for now.

On the daily time frame there is a high that technical analysis textbooks call “Eva” – i.e. the the high has formed over the course of several (in this case four) days, and after the last unsuccessful attempt to break above the resistance traders and investors started selling.

The situation with this pair has become even more interesting – such a high could become a double top, if the pair attempts once more to break above the historical resistance level. In the alternate scenario those attempts to break above the resistance will end and the trend will reverse.

Meanwhile let us take a look at the shorter time frames, which are usually what most traders focus on – for example the one-hour time frame. It’s quite noticeable that the pair is moving quite smoothly, the candlesticks have short shadows and long bodies and form long movements in one direction, which are great for intraday trading. That means that when the pair chooses a direction in the long-term intraday traders will have excellent opportunities to find new entry points to open new positions and profit.

In my next post I will focus on the different possible entry points which can be seen, as well as the outcomes of the trades and I will explain why such movements are very good for traders. Although these examples occurred in the past I think that from a theoretical point of view they can be very useful for many traders.

NZD/CAD Is Testing the Resistance Zone Around 0.96 for a Fourth Time

The pair is at a very interesting level – it has formed a triple top and the expectation was that it would begin moving to the downside, but it has once again climbed to test the still unbroken resistance at 0.96.

There is no such thing as a quadruple top in technical analysis – or at the very least I have never read about one. The pair testing the resistance for a fourth time means that we will most likely see a breakout and a further move to the upside above the resistance level, which means that NZD/CAD will reach historical highs.

Only a strong fundamental reason could ruin this scenario. There are persistent rumours that the Reserve Bank of New Zealand could lower its interest rate, which is currently 2.25, and that will inevitably weaken the New Zealand currency.

Either way, it’s a good idea to watch this pair carefully in the coming months.