Without major economic catalysts expected, this simple technical setup on NZD/CAD is one to watch for potential short-term pips.
Short-term Resistance on NZD/CAD?
As mentioned above, we don’t have a lot on the forex calendar in the way of scheduled economic updates, so purely technical setups have strong odds of playing out at the moment. So for today we’re checking out NZD/CAD, which is back at a previous strong area of interest around the 0.8770 handle. This area acted as both support and resistance in August, so there are decent odds that technical traders may act on this area once again.
We like this pair for short-term pips as volatility may stay bid with fresh headlines from New Zealand in the form of better-than-expected retail sales data and commentary from RBNZ Assistant Governor Hawkesby that interest rates will not be closely linked to lockdown protocols.
We’ve also got oil on the move, recovering from its recent dip after headlines that the U.S. Food and Drug Administration (FDA) fully approved the Pfizer/BioNTech two-dose vaccine, raising that odds of a faster economic recovery from the recent negative pandemic developments. We think oil’s recovery is going to be a short-term catalyst for a bullish move in the Loonie, raising the odds that NZD/CAD bears can hold and potentially turn the market back lower at the 0.8770 area.
With that in mind, we’ll be watching out for bearish candles to form on multiple timeframes before considering a short-term bearish position on NZD/CAD. And if that sentiment holds, we could see a move back to the 0.8700 major psychological handle within a session or two based on the daily ATR of around 70 pips.
What do you guys think? Will the bears take back control here and the strong area of interest? Will oil continue to rally to help lift the Loonie in the short-term?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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