NZDCAD. Something for the long-term traders
|At the beginning of the new month and at the end of the week we have something for the long-term investors, who do not want to trade on the USD. Interesting bearish setup emerged on the NZDCAD. Yes, we still have an uptrend there but there are some signals that this will soon finish and the bears will take control over the market.
First of all, look at the 0.9630 resistance (grey). That was a major resistance level for few years but buyers managed to break it at the beginning of the November. Unfortunately for them, they could not hold it which created a false breakout situation (yellow). False breakout itself is a sell signal but here it is also strengthened by other factors. One of those factors is a H&S formation which can be spotted on a daily chart. This trend reversal pattern is still not active as the price is above the neck line (blue), so bears still have to be patient.
Another thing supporting the bearish view is the correction equality and to be precise – a lack of it. As we can see, previous two corrections were similar, the third one is deeper, which breaks this pattern and shows a bullish weakness.
Unfortunately, in our opinion, it is still too early to sell as we are still above the neck line but also above the local support on the 0.93 (green). Breakout here, should be our trigger and a trading signal. In our opinion, you should open position only if all odds are in your favour. So far, most of them are but if you will wait a little bit more, all of them can.
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