As I type this, the NZDCAD is testing 4-hour ascending channel support for the third time since its inception on May 23.
I’ve written about this type of price action in the past. Whenever a market begins to lean on a support level like this, it usually suggests that a breakdown is imminent.
You can even see how the June 5 high failed to reach channel resistance. This was the first time the NZDCAD didn’t tag the channel top before retreating lower. I pointed this out in the member’s area yesterday as a sign of potential weakness.
Fast forward to today, and you can see how the pair is struggling to move away from channel support near 0.9100. So far, buyers are managing to keep prices above the key support level, but can it last?
We should know the answer to that question in the next 24 to 48 hours. That means waiting for Monday or perhaps Tuesday before further deliberation.
If the NZDCAD closes below channel support on a 4-hour closing basis, it will expose the 0.9000 handle. It’s difficult to see on the 4-hour time frame, but a glance at the daily chart and you’ll notice how significant this level has been since late 2014.
A daily close (using a New York close chart) below 0.9000 would open the door to the next support level at 0.8860. And not far below that is the current 2018 low at 0.8786.
In summary, it appears the NZDCAD is readying for another run at the 2018 lows, but a close below channel support is needed to confirm the shift in sentiment.