The NZDCAD has been on our radar since December 26th when the pair was consolidating below former trend line support. More specifically, we were watching for bearish price action from the 0.9340 area.
However, instead of finding sellers at 0.9340 last week, the pair punched through the area and rallied to a high of 0.9414.
There was no sell signal, so we never entered short.
But then on Friday, the pair plunged back below the trend line. This left a weekly bearish pin bar in its wake, something I mentioned over the weekend.
In that same weekly forecast, I pointed out how the 0.9340/50 area should continue to act as resistance. Sure enough, yesterday’s high was 0.9349 and the NZDCAD is currently trading at 0.9234.
I entered short at 0.9343 due to last week’s bearish pin bar. But because of the holidays, I’m only using a half-sized position.
My reasoning behind the entry was quite simple. We had a sell signal on the weekly time frame, bearish momentum since early November and a favorable risk to reward ratio.
With that said, there is another level that could produce an opportunity over the coming sessions. Just like the GBPUSD which I mentioned yesterday, the NZDCAD is trying to form a temporary base near 0.9225, a level I pointed out last Monday.
From here I’ll be interested in adding to my position on a daily close below 0.9225. My final target remains the July low at 0.9080.
Alternatively, a move above last week’s high at 0.9414 would negate the entire setup.
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