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NZD/CAD Trading Around Importance Price Level

NZD/CAD Trading Around Importance Price Level

Quasar Elizundia, Contributor

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Talking Points:

  • NZD/CAD Fails To Break Previous Week High Level.
  • RSI Starts To Show Momentum Loss To The Upside
  • Support And Resistance Trend Lines Mark Importance Zone Level For NZD/CAD

Short-Term Technical Outlook:

After closing the previous week with two great days to the upside, the NZD/CAD cross seems to be now starting to favor the Canadian dollar this week. This lack of strength to the upside in the cross can be observed in the chart below as at the start of this week the cross failed to reach higher price levels and in addition, RSI has now started posting lower levels on extreme upside prices, signal that could be interpreted as a call for NZD weakness.

As an extra signal, at the middle of today’s U.S. trading session, the cross has broken below the prevailing upside trend line and now it has started using it as a resistance level.

NZD/CAD 15 Minute Chart:

(Created Using Marketscope 2.0)

NZD/CAD Daily Chart:

(Created Using Marketscope 2.0)

Long-Term Technical Outlook:

As observed in the chart above, NZD/CAD is currently sitting in a confluence zone of great importance. Two important trend lines comprise this level. The first one is the down sloping resistance line from the 2014, 2015 and 2016 high price levels. On the second hand, we have the Support Trend Line from the all-time low of February 2009. As we can see, each one of these Trend Lines has proven to be of key importance in NZD/CAD price action over the last few years.

Bottom Line:

Given that we are starting to see a loss of momentum in the short-term for the NZD/CAD and in the long-term technical picture the cross is right at a confluence technical level, the cross is likely to start showing more momentum to the downside in the upcoming sessions.

Tomorrow both economies will release economic data. Depending in the results, a surprise release could work as a catalyst for a strong movement in the cross.

In a contrary scenario, if the BoC comes out with a dovish tone in its Monetary Policy Report, this could lead the cross to break higher through this confluence zone and should alert traders that the cross might be looking to reach levels around the 2014 all-time high.

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Written by Quasar Elizundia

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