Is a reversal in the cards for NZD/CAD?
The pair made a couple of failed attempts to bust through the .8250 level, creating a double top on its 4-hour chart.
Check out these technical levels and potential targets!
NZD/CAD 4-hour Forex Chart Faster with TradingView
After being on a steady climb since the beginning of the year, NZD/CAD found its rally cut short after the Reserve Bank of New Zealand (RBNZ) gave a “dovish hold” decision last week.
As it turned out, policymakers aren’t keen on hiking interest rates anytime soon since they believe inflation could fall back inside its target range in the near-term.
Meanwhile the U.S. Supreme Court decision to declare Trump’s tariffs illegal also brought some hope for Canada’s trade sector. At the same time, elevated crude oil prices on account of US-Iran tensions are also lifting the correlated Loonie.
Are we about to see a downtrend on NZD/CAD next?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the New Zealand dollar and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
NZD/CAD is already hovering above the neckline of its reversal chart pattern around the .8150 minor psychological mark. Look out for long red candles closing below S1 (.8130) that could clear the way for a selloff that’s the same height as the formation.
Additional bearish targets could be found around S2 (.8070) then S3 (.8010) near the .8000 major psychological mark. Sustained selling pressure could even drag the pair all the way down to the January lows close to the .7900 handle.
On the other hand, a return in upside momentum could allow the current floor to hold, potentially lifting NZD/CAD back above the pivot point (.8190) towards the highs at R1 (.8240). Stronger bullish pressure could allow the uptrend to resume and the pair to break higher towards R2 (.8310) and beyond.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
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