NZD/CAD Could Be On The Verge Of A Major Breakdown
Matt Simpson April 23, 2019 7:40 AM
NZD/CAD is testing key support of a 5-month double top pattern. Given the size of the prior swings within its downtrend, this could be a pair well worth monitoring for a major break lower over the coming week/s.
We can see on the daily chart that momentum since the March high is predominantly bearish and we’ve seen a nice pullback into the averages before accelerating lower again. Prices are currently hovering above 89c, which is right on a 38.2% Fibonacci level. If prices are to break lower (and they appear eager to do so…) we’re essentially looking at a double top pattern. If successful, the pattern projects and approximate target around 85.45.
Seasonally, April and May tend to be bearish months for NZD/CAD and price action is doing its upmost to maintain this tendency. Furthermore, price structure on the weekly chart points to the potential for further downside if incoming data (and CB meetings) allow.
It’s when we look at the weekly chart we begin to appreciate its downside potential and the significance of the 2016 trendline. A bearish engulfing week marked a failed attempt to break above it and take it back in line with the longer-term bearish trend. Moreover, the 8-week eMA is on the verge of crossing beneath the 21-week eMA. And, as price action is now testing key support of its 5-month double top, we think this pair is well worth monitoring, given the depth of the prior swing within its downtrend.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.