The New Zealand dollar initially gapped higher against the Canadian dollar on Monday but has seen a significant amount of resistance above to cause issues. Because of this, it looks as if we may need to pull back slightly, if nothing else just to build up momentum. The nasty candlestick on Friday suggested that perhaps we have a big fight on our hands near the 50% Fibonacci retracement level, and of course we have the 200 day EMA above. We are currently hovering around the 0.85 CAD level, which of course will attract a certain amount of attention as well.
Pulling back to the 50 day EMA is likely but is not necessarily extraordinarily bearish. It could be an area where we need to build up momentum to turn around and go higher. Keep in mind that crude oil has been rallying and that of course helps the Canadian dollar. All things being equal, the market breaking higher and above the 200 day EMA would be the end of the downtrend, it would also have the market trying to take out the 61.8% Fibonacci retracement level. At that point, it becomes a “buy-and-hold” market. I suspect that we are going to see a lot of chop back and forth, and even if we are getting ready to change the trend for the longer-term, it’s not going to happen overnight. It’s very likely that we will see some type of pullback, and therefore a short-term selling opportunity. If the market takes out the 50 day EMA, then it should continue much lower, perhaps down to the 0.8250 level. Remember, the New Zealand dollar is highly sensitive to the Asian economy, which of course is getting a bit of a beating due to the US/China trade situation. All things being equal, this is a market that is ready to pull back, and then we can revisit the situation if you days.
Pulling back to the 50 day EMA is likely but is not necessarily extraordinarily bearish. It could be an area where we need to build up momentum to turn around and go higher. Keep in mind that crude oil has been rallying and that of course helps the Canadian dollar. All things being equal, the market breaking higher and above the 200 day EMA would be the end of the downtrend, it would also have the market trying to take out the 61.8% Fibonacci retracement level. At that point, it becomes a “buy-and-hold” market. I suspect that we are going to see a lot of chop back and forth, and even if we are getting ready to change the trend for the longer-term, it’s not going to happen overnight. It’s very likely that we will see some type of pullback, and therefore a short-term selling opportunity. If the market takes out the 50 day EMA, then it should continue much lower, perhaps down to the 0.8250 level. Remember, the New Zealand dollar is highly sensitive to the Asian economy, which of course is getting a bit of a beating due to the US/China trade situation. All things being equal, this is a market that is ready to pull back, and then we can revisit the situation if you days.