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Yesterday saw CAD strength across the board following the BoC Rate Statement. While some may say that the statement didn’t deliver the kind of explosive move the market was anticipating, it still managed to deliver a technical setup we can play going into the end of the week.
NZDCAD has been in an uptrend for some time now, rallying more than 800 pips since late September of last year. Although this pair is in an uptrend, yesterday’s bearish pin bar at resistance leads me to believe that a pullback may be in the cards.
The .9472 handle has acted as a key level since early 2014 and later went on to act as resistance in both June and July, which later saw the market sell off to the tune of 850 pips. While I don’t think we will see that kind of decline off of yesterday’s pin bar, I do think the pattern presents a favorable selling opportunity.
A daily close back above .9472 would negate the setup, while a move down to .9276 could see buyers step up to drive the market higher. The .9276 level also represents an unclosed gap and is the 50% retrace of the February 3rd swing low and the March 4th swing high.
Summary: Potential to sell yesterday’s bearish pin bar using a 50% entry. A daily close above .9472 would negate the setup. Profit target is .9276, leaving us with a potential 3R setup.