CADNZD soars, gaining 129 pips (1.16%) within a single day on high volume
Canadian Dollar/New Zealand Dollar (CADNZD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
CADNZD ended the month -1.43% lower at 1.1249 after surging 129 pips (1.16%) today on high volume. This is the biggest single-day gain in over two months. The bulls were in full control today, moving the market higher throughout the whole session. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CADNZD as at Jul 31, 2020):
Friday's trading range has been 176 pips (1.58%), that's far above the last trading month's daily average range of 79 pips. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for CADNZD.
Notwithstanding a weak opening CAD/NZD managed to close above the previous day's open and close, forming a bullish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
The FX pair managed to close back above the 20-day moving average at 1.1225. When this moving average was crossed above the last time on Wednesday, CADNZD actually lost -1.11% on the following trading day. Prices are trading close to the key technical resistance level at 1.1285 (R1). After having been unable to move above 1.1287 in the prior session, the pair ran into sellers again around the same price level today, failing to move higher than 1.1274.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and could now be heading back up towards the mean of the Bollinger Bands at 1.1225.
While the market is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the close-by swing high at 1.1287 where further buy stops might get activated.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "52 Week Low" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for CAD/NZD. Out of 61 times, CADNZD closed higher 57.38% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 60.66% with an average market move of 0.20%.