The NZD/CAD pair continues to struggle, as the 0.95 level offered far too much resistance yet again during the Wednesday session. Looking at this chart, we ended up forming a shooting star for the session on Wednesday, and with that, I believe that the sellers are starting to gain the upper hand. After all, the New Zealand dollar is in exactly doing that well, and the Canadian dollar is starting to flex its muscles slightly. I’m not looking for a massive turnaround here, just simply an opportunity to sell.
When you look at the chart, notice that the MACD is showing weakening momentum. On the other hand, the market has been going higher. Because of this, we have divergence, and as a result it looks as if the market is struggling even more so than the candle sticks show. If that’s the case, then the market most certainly will pull back. Because of this, I am looking for selling opportunities.
On the other hand…
On the other hand, if we managed to break above the top of the shooting star for the Wednesday session, I think that this market would then go much higher based upon the fact that we would’ve broken significant resistance. Ultimately, that market should head to the 1.00 level given enough time, as it is the next large round number. I have no interest in selling this market. Once we get above the 0.95 handle, but until then, I anticipate that there will be a significant pullback.
That pullback could head down to the 0.93 handle, and then perhaps even the 0.90 level. Nonetheless, expect a bit of choppiness between here and either one of those two targets, as there are plenty of buyers below. In order to take advantage of divergence, you have to be willing to deal with significant volatility. Unless you can hang onto that trade, this may not be the set up for you.