Near-term Trade Setups in USD/CAD and NZD/USD

2019-06-27 05:00    MichaelBoutros
  • Updated levels on trade setup we’ve been tracking in Loonie (USD/CAD) & Kiwi (NZD/USD)
  • Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT (8:30am ET)
  • Check out our 2018 projections in our Free DailyFX US Dollar Trading Forecasts

Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

USD/CAD Price Chart - Loonie 120minNear-term Trade Setups in USD/CAD and NZD/USD Expert Analysis 1

In my latest Canadian Dollar Price Outlook we highlighted near-term confluence support at 1.3175 while noting that a break, “below this threshold is needed to mark resumption targeting more significant support at the yearly low-day close / 100% extension at 1.3105/23 – look for a bigger reaction there IF reached.” Loonie is testing this key zone today in New York trade.

While the broader outlook remains weighted to downside, the immediate short-bias may be at risk heading into this region. Initial resistance now at 1.3151 backed by the weekly open at 1.3211. Bearish invalidation now lowered to 1.3258. Looking for a rebound to fade off one of these levels targeting a move towards 1.3052/67. Review my latest USD/CAD Weekly Price Outlook for a look at the longer-term Loonie technical trade levels.

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NZD/USD Price Chart - Kiwi 120minNear-term Trade Setups in USD/CAD and NZD/USD Expert Analysis 2

In last week’s Kiwi Price Outlook we noted that NZD/USD recovery was approaching, “initial resistance targets at 6528/33 and ultimately a topside breach of this formation is needed suggest a more significant low is in place.” Price broke out just one day later with the advance now targeting the resistance at 6705/12 – a region defined by the 2019 open and the 50% retracement of the yearly range.

The focus is on a reaction off this zone on the back of a seven-day advance in Kiwi with the immediate long-bias at risk into the yearly open. From a trading standpoint, a good spot to reduce long-exposure / raise protective stops – be on the lookout for possible topside exhaustion here. Interim support 6657 backed by the June trendline (currently ~6610). Bullish invalidation now raised to the weekly open at 6589. Review my latest NZD/USD Weekly Price Outlook for a look at the longer-term Euro technical trade levels.

NZD/USD Trader SentimentNear-term Trade Setups in USD/CAD and NZD/USD Expert Analysis 3
  • A summary of IG Client Sentiment shows traders are net-long NZD/USD - the ratio stands at +1.07 (51.6% of traders are long) – neutral reading
  • Traders have remained net-long since April 2nd; price has moved 3.3% lower since then
  • The percentage of traders net-long is now its lowest since March 20
  • Long positions are 10.7% lower than yesterday and 38.0% lower from last week
  • Short positions are 65.7% higher than yesterday and 130.2% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Kiwi prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current NZD/USD price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in Kiwi retail positioning are impacting trend- Learn more about sentiment!

For a complete breakdown of Michael’s Trading Strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex


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