Is it time for New Zealand Dollar / Canadian Dollar (NZD/CAD) bears to take some profits?
The NZD/CAD has been in a downtrend for the U.S. summer months.
The pair is currently down approximately 700 pips since the bearish decline started towards mid June 2017.
Traders who caught the entire downward move racked up some handsome profits. However, as with all financial markets, price doesn’t only make lower lows, in the case of a downtrend, there are also periods of consolidation or pullbacks.
Most recently NZD/CAD traded in a range from mid July through mid August before breaking out of the range a couple of weeks ago and resuming the downtrend.
Traders who caught the most recent bearish drop and stayed in the trade until hitting a major level of support racked up over 200 pips in profit in less than a 2-week period of time.
The pair has recently hit a major level of support in the .9030 area. Traders who are short the NZD/CAD may want to consider taking some profits or exit their NZD/CAD trade all together.
As we kickoff the New York session the Swiss Franc (CHF) is showing strong intraday bearish momentum. The currency is down -0.13% since the start of the trading week and has recently retested the 1.0391 resistance level (futures).
The Japanese Yen (JPY) has strong bullish momentum going into the New York session. JPY is up 0.22% for the trading day.
The following list of currencies are down since the market opened on Sunday:
Australian Dollar – AUD
Canadian Dollar – CAD
US Dollar – USD
Swiss Franc – CHF
The following list of currencies are up since the market opened on Sunday:
British Pound Sterling – GBP
Euro – EUR
Japanese Yen – JPY
New Zealand Dollar – NZD
The following trading idea has been developing for the past several hours and presents an opportunity to take advantage of New Zealand Dollar (NZD) weakness. The NZD has been trending to the downside for the entire month of August following disappointing Employment Change numbers reported at the beginning of the month.
Bearish New Zealand Dollar (Daily Chart)
Traders looking to get short the New Zealand Dollar may want to consider taking an entry off an area of resistance for the New Zealand Dollar / Canadian Dollar (NZD/CAD)
NZD/CAD Resistance Level (1-hour chart)
Potential profit targets for the NZD/CAD bearish trade are as follows:
Support Level #1: .9155
Support Level #2: .9115
Note: This is not an intra-session trading idea. Those who take this trade should expect to be in the trade for hours or possibly days.
An ascending triangle is a bullish chart pattern. It is identified during an uptrend and used as a continuation pattern. There are also times when an ascending triangle marks the reversal of an uptrend and starts the formation of a downtrend.
Traders looking to go long or buy a financial instrument that is in an uptrend may find that an ascending triangle eases the process of identifying the entry, profit target and stop loss placement.
The pattern consists of an uptrend, multiple price rejections of the highs forming a level of resistance, and an upward slope of higher lows.
Two trend lines can be drawn to form the triangle. A horizontal line drawn across the equal prices forms resistance. An upward slope is drawn to connect higher lows to form support.
How To Trade the Ascending Triangle
Traders can spot an ascending triangle by looking for an uptrend and then an accumulation period. The accumulation period should have lower volume than the uptrend.
Trend – An established uptrend exists. The ascending triangle forms after the uptrend is formed.
Resistance – Price rejects the highs multiple times. A horizontal line can be drawn in between two or more points where price has rejected moving higher.
Support – After price rejects moving higher, price drops. This happens at least two times and with at least two price points forming higher lows. An upward sloping support trend line can be drawn to connect two or more higher lows.
Accumulation – As price moves in between the resistance and support areas volume accumulates.
Breakout – After the accumulation phase, price may break out above the resistance level as a sign that the uptrend has resumed.
Volume – During the formation of the uptrend volume should be high. During the accumulation phase volume should be lower than when the uptrend was forming, but should increase as price breaks above resistance.
Traders looking to enter a long position could enter a trade when either of the following two occurs:
price breaks out above resistance
price breaks out above resistance and then retraces into the ascending triangle
The stop loss can be placed below the lows of the beginning of the trend.
The profit target is equal to the height of the uptrend for a 1:1 risk-to-reward ratio. Traders who identify an ascending chart pattern early in the formation of the trend, may have an opportunity to profit from a 1:3 risk-to-reward ratio or better.
Another factor in determining the reward potential for a trade is the instrument traded. Trending markets such as stocks have almost an indefinite potential for upward mobility, whereas sideways markets, such as forex and futures tend to deviate only so far from the mean before retracing significantly or reversing.