Yesterday’s analysis focused on the US Dollar and Australian Dollar. Today our focus shifts to the NZD Dollar and the EURCAD.
The NZD trend was strong but recently has had difficulties with pushing forward. Why is that?
One of the primary reasons was actually mentioned in yesterday’s article: the AUDNZD tide is slowly but surely turning. At the very minimum the AUDNZD is witnessing a bigger retracement and maybe even a switch of control. The NZD had dominated the pair for very long, but the AUD is gaining ground. Click here for information.
The Kiwi currency pair (NZDUSD) specifically is building a contracting triangle (magenta trend lines). In those cases it is always better to wait for the confirmation of the break of such as chart pattern. Why? Because the top and bottom of the triangle become support and resistance and when price approaches it, there is a decent chance of price respecting those levels.
The 2 main scenarios are:
2) A break of the triangle to the downside: a counter trend break which will most likely find support again at the confluence of Fib target (-61.8%), broken daily top (horizontal green trend line), support trend line from the daily chart (purple)
The target for the upside is 0.8840 which is the high dating back to July 2011.
The EURCAD trend has been strong (3,500 pips) and has lasted long (since August 2012). But are there signs of a reversal? Let us examine.
A well known saying is the trend is your friend until it bends. In the case of the EURCAD the trend has certainly been a good friend. Are there signals of a trend bending?
Here are the main factors to consider:
1) Massive monthly week during the month of March
2) Price has approached weekly resistance levels (on the left)
3) Price has broken the steep support trend line (purple)
4) Since the vertical red line on the chart the weekly candles have posted continuous higher weekly highs and lows with the exception of a couple of candles (but never more than 5). At the moment 3 closed weekly candles have failed to break the current top
5) Divergence on daily chart
Conclusion: it is still too early to confirm whether price is making a potential bigger retracement OR whether it will turn out to be a reversal. But one could say that the EURCAD is struggling.
The next 2-3 weeks the EURCAD price will need to break through the top to keep the trend alive. Otherwise a bigger reversal is awaiting the EURCAD. [tweetable alt=””]For the moment though EURCAD upside seems likely as a follow through of last week’s bullish candle[/tweetable]. Keep an eye on the resistance Fibonacci levels (orange) as price could struggle at these Fibs.
Make sure to check out Nathan’s video on the potential DTT setups and wish you many pips and Happy Trading!
Thanks for sharing this article as well!
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