Trade view /
14 July 2016 at 4:24 GMT
Monday’s inflation update will be the key to its direction leading into the Monetary Policy Statement on August 11 where market pricing suggests a one-in-three chance of a rate cut. The Bank of Canada has a similar problem with a surging housing market, which is one reason it didn’t cut rates in its own policy review yesterday. But of more immediate concern for the CAD is the oil price which seems to be coming under renewed pressure.
Management and risk description
The dominant chart structure in NZDCAD is a developing two-year Inverse Head & Shoulders reversal formation (refer daily chart below). Already, key Neckline resistance has been tested and NZDCAD’s reaction from this resistance presents a buying opportunity.
Short-term support now lies around the 0.9300 level, to yield another attempt at key Neckline resistance (around the mid 0.9500s area. Upon completion of this reversal structure (on a sustained break above Neckline resistance) an upside objective projection toward the 1.0800 level will be given.
Entry: buying NZDCAD on a close above 0.9550.
Stop: 0.9441, initially.
Time horizon: allow several months for target to be met.
NZDCAD daily chart (click to expand)
NZDCAD weekly chart (click to expand)
Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more
— Edited by Gayle Bryant