The NZD/CAD pair tried to rally during the session on Tuesday, but for the second day in a row was push backwards and ended up forming a shooting star. Because of this, it appears that the market is ready to continue falling, but I need to see this market break down below the 0.95 level in order to feel comfortable shorting. What’s even more interesting is the fact that we also see divergence on the MACD. This can often lead to a trend reversal when the momentum is slowing down, yet price is still rising. With that being the case, this has caught my attention and I believe that it could possibly be a decent shorting opportunity for a move back down to the 0.93 handle, if not much lower. In fact, this can often be the beginning of a trend reversal.
On the other hand…
On the other hand, if we break above the top of both of these shooting stars, I think that would be a very bullish sign and that the pair would continue to go much higher at that point, probably heading to the parity level eventually. I think this would also be a sign that the Canadian dollar would be an massive trouble, and we would have to also Sir pain attention to the USD/CAD pair as well, as we could make a serious move towards the 1.30 level in that pair, which was so resistive. If we break above that level, the Canadian dollar is toast.
Ultimately though, I believe that a pullback is in order, but it really doesn’t matter to me until we get below the 0.95 level due to the fact that it is a large, round, psychologically significant number, and the scene of a recent breakout. So with the divergence that we see in this market, we could possibly be witnessing a bit of a “false breakout.” However, you are going to have to be careful and wait for a daily close in my opinion to actually put money to work.
