NZD/CAD moves to the top of the technical watchlist today with its consolidation behavior at the top of a sweet looking uptrend!
Where could we see the bulls take over again? And if they don’t where may it be go time for the bears?
On the one hour chart of NZD/CAD above, we’ve got another text book uptrend in the works, but price has stabilized so far this week.
The 0.8150 minor psychological level seems to be the magnet equally attract both sides of the market, essentially creating a symmetrical triangle at the end of this uptrend.
This pattern is one where traders we can easily mark breakout points, in case volatility picks up as well as momentum to one side. Technical bulls will look for a break of the falling ‘highs’ before considering a long strategy, the most likely setup technical traders will be on the look out for this week.
An upside break and sustained move higher could take the pair up to the R1 Pivot resistance level before buyers lose momentum.
And for the bears, they may look for a break below the higher ‘lows’ before setting a potential short risk management position. But there are other technical arguments to consider.
This consolidation / symmetrical triangle also happens to be riding on a slew of technical argument below the market at the moment. First, we can see the rising moving averages flowing higher with the rising ‘lows’ trendline, which may draw in all sorts of orders into this uptrend.
There’s also the broken resistance area just under the 0.8100 major psychological level, which turned into support and hovers just above the S1 pivot support level.
All put together and because of the uptrend, we’ve got a cornucopia of technical buy arguments to watch out for if NZD/CAD dips in the days ahead.
But of course, if traders break the market below those arguments, the odds rise sellers will take that as a cue to push the market lower, potentially to the 0.8000 major psychological level and S2 pivot support (0.7980) based on the daily average true range of around 50 – 60 pips.
As always, it’s all up to the fundies to determine what markets do next, so don’t forget to do your work there. And once you’re set on an outlook and strategy, don’t forget to also practice good risk management skills!