Hello traders! Today we are observing NZD/CAD currency pair on a Weekly and Daily timeframes. Of course, this is a long term price scenario where price movement can also be substantial.
On a Weekly chart, price continues to trade within the descending channel. We can see a clear rejection of the 50% Fibonacci retracement while the price stays below the 200 Exponential Moving Average. New lower lows and lower highs are being formed, and all of these facts are in favour of a downtrend.
If we look at a Daily chart, NZD/CAD broke below the uptrend trendline. On the recent corrective move up, it went up and re-tested the trendline breakout point where it found the resistance. The resistance has been rejected, Daily close has been below 0.8685. At the same time, the downtrend trendline has also been rejected. Fibonacci, applied to the recent corrective wave up, shows potential downside targets. The nearest target is seen at 161.8% retracement level that is 0.8115. Second support is at 0.7730, which his 261.8% Fibs. This level also corresponds to the lower trendline of the descending channel on a weekly timeframe. And the final target is seen at 0.7345, which is 361.8% Fibonacci retracement level.
All-in-all, the trend is bearish and any pullbacks can provide a selling opportunity. At the same time, Daily break and close above 0.8737, will invalidate bearish scenario and can result in a trend reversal.
Bias: Bearish while 0.8737
Potential Resistance Zone: 0.8685 – 0.8737
Potential Targets: 0.8115, 0.7730, 0.7345
Have a profitable trading!