Don’t look now, but NZD/CAD is right at the very bottom of its long-term range!
Will Kiwi bulls keep defending this floor or are we about to see a big breakout next?
Take a look at these major inflection points on the 4-hour time frame:
NZD/CAD 4-hour Forex Chart by TradingView
Remember that NZD/CAD range resistance we had on our watchlist ahead of the BOC decision?
Well, that pair gained downside momentum on its bounce off the ceiling despite a dovish announcement, as the Loonie took cues from the more upbeat FOMC statement instead!
In addition, a sharper contraction reflected in New Zealand’s quarterly GDP report reinforced RBNZ easing expectations, dragging the pair all the way down to the range support.
Will the floor still hold?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the New Zealand dollar and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
NZD/CAD is still hovering around the bottom of the range just slightly above the .8050 minor psychological mark, still deciding where to go next.
A bounce could take it back up to the pivot point level (.8130) or to the middle of the range near the moving averages and .8150 handle. Stronger gains could even lift the pair to R1 (.8190) near a major psychological mark or the top of the range at the .8250 level again.
On the other hand, long red candlesticks closing below the range bottom could suggest that a move down to the next support zone at S1 (.8000) and a major psychological level is due. Keep an eye out for a potential drop that’s the same height as the rectangle formation, too!
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
