The NZDUSD and AUDUSD have been very active currency pairs drawing the focus of lots of currency traders recently. There is a lot going on in the technical picture. Craig Erlam, Senior Market Analyst for OANDA highlights the downward channel as the key indicator to recognise. When you such a strong downward trend you are looking for the price action to make new lows. But ultimately if you see the drop off that we have seen in the technical picture since August; you must keep an eye on the momentum indicators. When is momentum going to run out?
The downtrend in the NZDUSD is however levelling out. We are seeing a divergence between the price and the moving averages. We have a slow down of the trend making a new higher low. That would suggest that we may be entering a correction move. If we do see a bounce then the most notable level will be 0.70. A strong round number. Craig expects a larger correction; but the 0.70 level is the initial test.
Moving over to North America we look at USDCAD. This pair is volatile and strongly effected by data releases. Strong risk appetite needed for this pair. The technical picture shows that the pair has been sideways bound since the start of November. Trading range between 1.2925 and 1.27. Resistance around the 50 fib has been key, capping any moves to the upside. Whilst price support and resistance support has capped any moves to the downside.
This chart is looking bearish. Admittedly if it broke above the 50 fib, it would be a strong Bullish signal. But it has stumbled around this level quite a lot and takes away from the bullish technical indicators. Below the 200SMA / 233SMA, double top formation since the start of November. This suggests that we could lower down to 1.2450. A prior zone of support resistance.
You can see Craig’s other video of the day on Gold & Bitcoin by clicking here.