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USD/CAD Bullish, GBP/NZD Big-picture Pattern Breakout Pending

USD/CAD Bullish, GBP/NZD Big-picture Pattern Breakout Pending

2018-09-06 07:52:00
Paul Robinson, Strategist
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Looking for forecasts, trade ideas, and educational content? Check out the DailyFX Trading Guides page.

USD/CAD bull-flag breakout to lead to higher prices

In recent weeks, the bull-flag we had previously looked at finally matured with the base of the pattern arriving right at the still-in-play 2012 slope in confluence with the 2016 trend-line. Tuesday’s surge pushed price outside the pattern, positioning it for higher prices.

Buying right here might not be in favor with some as it is short-term extended off the Aug 28 low, but in general the trading bias if higher, whether operating off the daily or a shorter-term time-frame (i.e. 4/1-hr). A pullback or consolidation is the preferred sequence on this end for initiating a trade, with a test and hold of the Feb slope as ideal.

Looking higher, expectations are for USD/CAD to at least trade beyond the June high at 13386, with nothing meaningful in the way of price resistance until near 13800, the May 2017 high. Invalidation on this set-up will come on a drop back inside the pattern near the 13000-mark.

USD/CAD Daily chart (Path of least resistance higher)

USD/CAD daily chart, path of least resistance is higher

GBP/NZD 9-month triangle to lead to powerful move, trading bias

This is a bigger-pic outlook, and despite it being so the weekly chart can be used as a guide for shaping a trading bias when looking for shorter-term set-ups. Price is currently around the top of the triangle dating back to November and could break any day now, but there is still the possibility we see GBP/NZD trade lower from here (maybe even a bearish break of the pattern) before going anywhere.

In either event, when it breaks we’ll run with that as our trading bias and look for short-term set-ups along the path of least resistance. Given the general trend prior to the triangle’s development, a top-side breakout is the most probable scenario. Given the size and duration of the pattern, a lasting, powerful move is anticipated.

These 4 tenets can be used to help Build Confidence in Trading.

GBP/NZD Weekly Chart (Triangle Breakout looms)

GBP/NZD weekly chart, triangle breakout looms

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held on Wednesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday’s for the Becoming a Better Trader webinar series.

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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