Aggressive NZD/CAD Bull Trend to Resume Near .6800?

Last updated 5/18/2009 2:22 PM EST (GMT -5) 6 Comments

FX360 Technical Analyst Staff

Technical Analyst, GFT

After topping out at .7068 near 61.8% resistance last Monday, last week's NZD/CAD pull back may be near completion as prices now approach daily trendline support. A bullish 4hr butterfly/gartley pattern has developed prompting our potential buy at just above projected pattern completion near .6797-.6776 as a result of the following Fibonacci convergence...

In other words, we're looking to buy at .6811 if prices to drop to pattern completion. The 161.8% ABCD extension is projected near previously established support (X1) confirming stop placement at .6691 as new lows may indicate trend reversal based on the daily bull trendline. This puts total risk at 120 pips. Initial target is set at .6947 (T1) just below 61.8% of CD and 78.6% of AD convergence followed by .7182 (T2) set just below 78.6% daily resistance, which results in a risk/reward ratio of about 1.13 to T1 and 3.09 to T2. Stops will be moved to break-even (.6811) upon achieving T1 in addition to taking profits on 1/2 the position in order to assure a profitable trade, and we'll let remaining profits run to T2.

Potential Strategy: Buy if prices drop to .6811 risking .6691 targeting .6947, .7182. 

Note: these targets are based on the forecasted CD leg, and may need to be recalculated based on the actual CD leg.

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  • Daily Chart - Near trendline support
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  • 4hr Chart - Bullish Gartley pattern potential near D

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Comments (6)

mikeo

May 18, 2009 at 02:35 PM ET

Roger, you are referring to the NZD/CAD pair, right?

rstojsic

May 19, 2009 at 08:14 AM ET

yes, my apologies!

cashcranker

May 18, 2009 at 04:49 PM ET

your subject line says nzd/usd but signal says nzd/cad can you send a correction out please?

rstojsic

May 19, 2009 at 08:18 AM ET

thank you, the subject line has been updated all information is correct based on NZD/CAD price action. My apologies for the confusion.

cslos77

May 20, 2009 at 05:58 AM ET

Hello Roger, since this pair has made new highs above the original "C" point have you readjusted it at all?

Both the Gartley and the Butterfly on your 4hr above fit nicely with the new "B" (just above 61.8 X1-A) and the new "C", but they drop the entry about 20 pips below your original entry (further below the Daily trendline).

Would love to hear your thoughts.
Jeremy

rstojsic

May 21, 2009 at 12:30 PM ET

Yes, you're exactly right in your line of thinking. In fact, Brad wrote an update to this setup yesterday... http://www.fx360.com/commentary/brad/1259/nzdcad-approaching-long-opportunity-at-06795.aspx

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