NZDCAD – I analyzed this pair on January 2nd. I predicted declines when the price after breaking down from the bearish engulfing was heading towards the growth channel support. The support was defeated and the falls reached 0.8600.
Currently there is another formation, this time it is a bullish engulfing. The formation, despite its “bullish” name, does not necessarily have to initiate growth. More important than the name is the direction in which the price will leave the formation. The MACD is in the middle of a downward divergence.
Tomorrow’s (1:30pm), two important events in the economic calendar, can determine the direction of the breakout – results from the U.S. (payrolls) and Canada. They may have a very big influence on the quotations of the pair NZDCAD and a possible price break-out from the mentioned inside bar may indicate the direction for the next few sessions.
Let’s take a fundamental look at NZDCAD
We can expect a few scenarios that I’ve put in the form of a table, where:
+ better than expected (US consensus +164,000. Canada +25,000.)
– worse than expected
the arrows indicate the probable direction for the pair after data
I have not included in the table results in line with the experts’ expectations – the market may not make significant movements, the volatility will be small and the price movement may be driven by other factors. Of course, these are assumed directions and such typing has little to do with price action or technical analysis, it is a more fundamental approach and should be treated as a curiosity. Tomorrow the market will verify whether such considerations make sense.
When analysing the H4 chart, it is possible to predefine the range of price movement. In the case of an upward strike, the goal may be the support of the channel currently around 0.8750.
In case of a downward breakout, which I consider more likely due to downward divergence, the price may go to a strong S/R of 0.8500.
Before the data I will open two pending orders SELL STOP and BUY STOP… hoping that a few minutes after 13:30 GMT one of them should start scoring… I will have Live Trading session at that time so you can attend for free and we can watch the market together, the link is below:
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