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NZD/CAD Collapse In Progress?

Last updated 9/28/2009 3:29 PM EST (GMT -5) 1 Comments

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FX360 Technical Analyst Staff

Technical Analyst, GFT

The  NZD/CAD bull trend we've seen over the past 9 months may be facing a potentially strong bearish correction over the next few weeks. Prices recently reached major resistance near .79 as defined by the following Fibonacci/geometric pattern convergence...

This may not necessarily result in a total trend reversal, however, the odds of a correction down to 8hr bull trendline support increase. Prices have already begun to drop, but are relatively close to bearish pattern completion. Considering risk/reward we've decided to enter short at current levels (.7793) with stop-loss at .7876. The first profit target sits at .7695 (T1) just above would-be 8hr bull trendline/61.8% support. Because of the potential 3-drive pattern, the final target of .7380 (T2) is set just above 61.8% support  (gray) of the entire 8hr uptrend ( note: this is also the CD leg on weekly) at which point we also have some Fibonacci support convergence (161.8% of most recent 8hr upswing, in blue).

Potential Strategy: Sell at market (.7793) risking .7876 targeting .7695 (T1), .7380 (T2)

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Comments (1)

juanflorez

October 07, 2009 at 08:12 AM ET

Now, it looks good, I joined the trade (only one lot) in the second touch below 0.7800 (fingers crossed)

Thanks for the TIP!

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