This Kiwi pair has been cruising lower with falling highs and lows inside a descending channel on its 4-hour time frame.
Will these correction levels keep the selloff going?
NZD/CAD 4-hour Forex Chart by TradingView
Dovish RBNZ policy expectations supported by weakening economic conditions in New Zealand have been weighing on the Kiwi over the past few months.
On the flip side, the Canadian dollar has been getting a bit of a boost from the strengthening dollar and some crude oil gains, keeping NZD/CAD on a steady decline.
Are sellers about to hop in on this potential trend correction?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the New Zealand dollar and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The pair is bouncing off the channel bottom and looks ready for a pullback to resistance levels marked by the Fibonacci retracement tool.
The 38.2% Fib lines up with R1 (.8110) near the mid-channel area of interest while the 50% level is at .8135. A larger correction could reach the 61.8% Fib at .8165 or the channel top near R2 (.8210), which could be the line in the sand for a bearish retracement.
Keep your eyes peeled for reversal candlesticks at these levels since a continuation of the drop could take NZD/CAD back down to the swing low near the pivot point level (.8060) or to new lows closer to S1 (.7960).
Note that the 100 SMA is still below the 200 SMA to suggest that the path of least resistance is to the downside, but a break above the nearby resistance zones could point to a possible reversal from the downtrend.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
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