In keeping with the theme of the last week, NZDCAD is on the brink of following its AUDCAD counterpart over the edge as the Canadian dollar continues to strengthen.
Here’s a full view of the 4-hour ascending channel:
For those who have been around for the past week, the idea of Canadian dollar strength is nothing new. GBPCAD started the trend on August 9th, and USDCAD was quick to follow via the bear flag pattern that broke down on August 11th.
And if that weren’t enough, AUDCAD has already departed from its ascending channel, which I also mentioned last week. All three CAD pairs have either hit the profit target we had set or are comfortably in the money.
Back to the NZDCAD. As always, the mere presence of an ascending channel does not indicate immediate weakness nor does it signal that a break is imminent.
However, the weekly chart below illustrates how the pair has struggled to overcome the 0.9570 handle since 2014. The perpetual failure at this level combined with the recent bearish price action hint at the idea that buyers are beginning to fatigue.
That said, my target on a break below channel support is relatively conservative. The 0.9090 area acted as resistance on June 9th and later served as support between June 21st and July 21st. It’s also the 50% Fibonacci retracement when measuring from the channel bottom at 0.8610 to the top at 0.9574.
Why not shoot for a more aggressive target?
Because the areas of value below 0.9090 are too ambiguous for my liking. Still, the July low offers traders a potential 180 pip gain but only with a close below support, which has yet to materialize.
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