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NZD/CAD Price Analysis: One for the bear's watchlist

  • NZD/CAD is on the verge of a top and correction to a deep support area. 
  • The W-formation is compelling, as is the latest positioning data that favour a reshuffling.

Commodity currencies over the past few months have been in vogue. However, the kiwi has topped the complex. The CAD could be underestimated which would see it inch higher in the markets favour vs the kiwi.

The bird is already the biggest G10 speculative long and the divergence appears less justifiable by any fundamental driver.

The following is a top-down analysis that illustrates the bearish prospects.

Daily W-formation

As illustrated in the above daily charts, the price has formed a W-formation and the neckline of the pattern would be expected to act as support on a retest of the area.

The structure, as it stands, has a confluence with a 50% mean reversion level from which bulls may wish to reengage as a target for the bears to exit. 

From an entry perspective, bears will be prudent to wait for bearish conditions on the lower time frames, such as the 1hour chart.

As it stands, the conditions remain bullish while the MACD is above zero and the price is above the 21 moving average.

This is one for the watchlist. 

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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