The NZDCAD has been on a tear since carving a multi-month swing low in November of last year. Since that time, buyers have managed to push prices higher by an impressive 850 pips.
However, the real test for bulls lies just 50 pips above today’s price. The intersection of the 0.9550 horizontal level and the trend line from the 2016 high creates a confluence of resistance that is sure to attract an influx of selling pressure.
A view of the weekly time frame illustrates both the technical catalyst for the November 2017 bounce and the upcoming resistance area.
In addition to these two trend lines, the NZDCAD boasts some of the best horizontal levels of any currency pair at the moment. This combination offers an opportunistic environment that has helped accelerate the NZDCAD toward the top of my watch list.
However, as we all know, past performance is not always indicative of future results. So just because the pair has been swinging in this 800 to 1,000 pip range does not mean it will continue.
It’s also important to respect the current short-term trend. While I believe the 0.9530/50 region will attract offers, it will be essential to watch for bearish price action should we get a retest of the area in the coming sessions.
If we do get a signal to enter short, the first key support will come in at 0.9450. You can see how this area served as resistance on March 7 and also provided support earlier in yesterday’s session.
A daily close (using a New York close chart) below 0.9450 would expose 0.9320/5 followed by the 0.9200 area. And if past performance is indicative of future results, we could see a longer-term move as low as the 2012 trend line support near 0.8860.
Alternatively, a daily close at 5 pm EST above the 0.9550 area would expose 0.9650/5 followed by 0.9750/5.