NZDCAD finds buyers again around 0.8870
New Zealand Dollar/Canadian Dollar (NZDCAD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
NZDCAD finished the month 1.45% higher at 0.8890 after tanking 103 pips (-1.15%) today on high volume. This is the biggest single-day loss in over two months. The bears were in full control today, moving the market lower 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 (NZDCAD as at Jul 31, 2020):
Friday's trading range has been 141 pips (1.57%), that's far above the last trading month's daily average range of 63 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 NZDCAD.
Even with a strong opening the currency closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 0.8860 (S1). The forex pair closed back below the 20-day moving average at 0.8908. When this moving average was crossed below the last time on Wednesday, NZDCAD actually gained 1.12% on the following trading day. After having been unable to move lower than 0.8860 in the prior session, the market found buyers again around the same price level today at 0.8870.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and might now be heading back down towards the mean of the Bollinger Bands at 0.8908.
Although the pair is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Selling might accelerate should prices move below the nearby swing low at 0.8860 where further sell stops could get triggered.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "52 Week High" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for NZD/CAD. Out of 61 times, NZDCAD closed lower 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 short side has been after 10 trading days, showing a win rate of 60.66% with an average market move of -0.18%.
With five out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are NZDUSD losing -1.04% and AUDUSD closing -0.72% lower. On the flipside the best performers have been USDJPY closing 1.12% higher and USDCHF gaining 0.48%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDZAR surging 1.87% and GBPZAR closing 1.79% higher. The worst performers of the day have been NZDHKD tanking -1.05% and EURTRY closing -0.96% lower. Read more