Watch for Rejections at Support in EUR/CAD and NZD/JPY
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The strong decline in EUR/CAD is bringing into play a steady trend-line dating back to February 2017. In conjunction with the trend-line is the 200-day MA, adding weight to its importance. It is currently sneaking below the line at the time of this writing, but should we see a forceful rejection (ideally today), then it may offer an attractive spot to pick up a beaten down pair at support.
In the event of a strong rejection, stops upon entry should be placed sufficiently below the low of the rejection bar. A head is a trend-line off the March high to be mindful of, but with the broader support in place a move higher should find EUR/CAD overcoming it if the trade is to work out. 15462 & 15718 are the first price levels to contend with and will be initial targets. Longer-term, if momentum can pick up then this recent decline may turn out to be a pullback within the broader trend higher since February of last year.
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EUR/CAD Daily Chart (Watch price action at trend-line)
NZD/JPY is currently in the process of testing significant horizontal support extending back to a gap in late-2016. There have been strong rallies posted off the mid-75s, one in April 2017 and the other just this past March. A strong rejection (i.e. – key reversal, bullish engulfing candle) could have a counter-move trade set-up in play. Stops on longs will be best placed below the swing-low created, should one be created. The target will be the trend-line off the January peak.
In the event of a breakdown below support, look for continuation of the recent slide. We’ll look at such a situation should it become relevant in the weekly webinars held on Wednesday and Friday at 9 GMT time.
NZD/JPY Daily Chart (Strong Price Support)
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---Written by Paul Robinson, Market Analyst
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