NZDCAD - Possible sell opportunity coming

Jan 20, 2019

Here we have the NZDCAD pair with a possible short opportunity. The pair has been in a downtrend on the daily timeframe, shown by the red falling trendline. The shorter-term uptrend on the 4-hour chart seems to have found resistance at the 78.6% Fib retracement, signalling that the price correction has finished and that the underlying downtrend may continue.

Another signal that supports a sell setup is the potential Head and Shoulders pattern, as shown on the chart. However, we would need a close below 0.8900 (the pattern's neckline) for the SHS pattern to confirm and for a sell position to be triggered. Once confirmed, the pattern projects a profit target of around 300-350 pips, which aligns with the 0.8600 price-level.

From a fundamental standpoint, the economy of New Zealand is showing signals of a slowdown. The latest GDP q/q came in at just 0.3%, well below the 0.6% estimate. On Tuesday, New Zealand publishes the CPI numbers which are expected to be around 0.0%. The Canadian dollar, on the other side, is well supported by the recent gain in oil prices.

Jan 21, 2019

Note

Notice the 1-5 impulse waves and the ABC corrective waves which are now in the formation. Here are the points for an AB-CD pattern.

Point (A) is the Head of the SHS pattern, point (B) is the low of the right shoulder, point (C) is the high of the right shoulder and point (D) would be projected to the lower 0.87xx area.