NZD/CAD Bearish Channel Correction

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NZDCAD is trending lower inside a descending channel visible on the 4-hour chart and is just bouncing off support. This signals that a correction to the resistance is in order, and the Fibs show where sellers might be waiting.

The 50% level lines up with the channel resistance and 100 SMA dynamic inflection point. This could be enough to keep gains in check and push NZDCAD back to the bottom of the channel around .8200 or at least the swing low. A larger correction could last until the 61.8% Fib near the 200 SMA and .8550 minor psychological mark while a shallow pullback could hit a ceiling at the 38.2% Fib.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. Stochastic is on the move up but dipping into overbought territory to reflect exhaustion among buyers. RSI has some room to climb before hitting its overbought region but is coming up close. Turning lower could indicate a return in selling pressure and a continuation of the slide.

NZD/CAD Bearish Channel Correction

The Loonie has been the weakest performer of the comdoll group as risk aversion hit financial markets and dragged oil lower as well. This was a double-whammy for the Canadian currency, which has already been reeling from lower odds of another BOC hike due to downbeat jobs data.

The Kiwi typically loses ground in these market situations also, but it has been a bit more resilient so far. Still, renewed focus on trade tensions and the RBNZ’s neutral stance could lead traders to be more bearish on this commodity currency.

For now, risk sentiment could keep pushing these currencies around in the absence of major reports, although it’s worth noting that the BOC is on the more hawkish end versus the RBNZ.

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