Short term
Trade view / 22 September 2016 at 13:35 GMT

Kiwi may be bird-feed for the loonie

FX Trade Strategist /
Instrument: NZDCAD
Price target:
Market price:

NZDCAD started the week with a bullish bias supported by better-than-expected New Zealand data – it didn’t last. A weak Global Dairy Trade result and rising oil prices combined with a dovish Reserve Bank of New Zeland interest rate statement alluding to future interest rate cuts has opened the door to additional NZDCAD weakness.

The intraday and short-term NZDCAD technicals are bearish. The September uptrend was negated when prices dropped through 0.9600 on Wednesday, which shifted the focus back to the September lows.

The failure of USDCAD to break above 1.3250 implies additional consolidation within the well-established 1.2850-1.3250 range. 

Bearish NZDUSD sentiment due to renewed rate cut expectations and firm to stable oil prices should drive NZDCAD back to the September low.

Management and risk description 

This trade is vulnerable to weak Canadian data on Friday. A retracement in the recent WTI rally could also put the stop loss in jeopardy.

NZDCAD has fallen fairly quickly over the past few days so a profit taking rally and consolidation of the move could trigger the stop.


Entry: sell ½ NZDCAD at market (currently 0.9545), balance at 0.9595.

Stop: 0.9647.

Target: 0.9430.

Time horizon: four days

NZDCAD 30-minute showing downtrend and stop-loss level:
Source: Saxo Bank 

NZDCAD four-hour with take-profit and Fibonacci levels shown:
Source: Saxo Bank 

NZDCAD five-year daily with moving averages:

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Source: Saxo Bank

— Edited by Michael McKenna

For more on forex click here.

Non-independent investment research disclaimer applies. Read more
assi assi
Hi Michael, that call short USDCAD was great ...thanks, im looking to short again...i feel this will visit 1.2820 so can you advice where is agood level to re enter short USDCAD...?
Michael O'Neill Michael O'Neill
I think USDCAD is 1.2850-1.3250. I think you need to see a break of 1.2990-1.3000 and sell the break.
Or else wait for weak Canadian data tomorrow (maybe) and sell a bounce in the 1.3090-1.3120 zone. It is really an oil play.
Estuardorlemus Estuardorlemus
Hi Mike. Any update???
Michael O'Neill Michael O'Neill
Sure: The downtrend is still intact. Cancel the second sell order and lower stop loss to 0.9555
Michael O'Neill Michael O'Neill
see chart
Estuardorlemus Estuardorlemus


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