The New Zealand dollar versus the Canadian dollar currency pair bounced off 0.8344 after a very convincing decline, letting the bears know that their dominance, at least for the time being, is over.
The decline that started at 0.8915 seems to have ended at the weekly support level of 0.8344, after the market printed a very healthy hammer candlestick pattern on August 30.
The pattern propelled the price above the important psychological level of 0.8400, but shortly after the bears tried to invalidate the movement by trying to etch a bearish engulfing — that ended as a dark cloud cover — from the “resistance” of 0.8400 via the September 6 candlestick. Of course, their attempt was futile as the bulls were already on their way after the first victory: the reconquer of 0.8400.
As a consequence, the dark cloud cover wannabe was invalidated today, September 6, as the price ticked above the opening of the September 4 candlestick.
Given these events, the expectancies are for the price to reach the 0.8577 area and then head for the old weekly support at 0.8692. Only a break under and a confirmation as resistance of 0.8344 has the power to invalidate this scenario.
After printing the low at 0.8346 the price headed for 0.8417, which is the technical correspondent of the 0.8400 psychological level. Even if initially it looked like 0.8417 is being confirmed as resistance and a new downwards leg is about to emerge, the low at 0.8365 made it clear that the market is bottoming.
As a result, the price went above 0.8417 and confirmed it as a support. As long as it oscillates above this level or it is falsely piercing it, expectations are for the 0.8516 level to be touched first, followed by the psychological 0.8600.
Levels to keep an eye on:
D1: 0.8344 0.8514 0.8577 0.8692
H4: 0.8417 0.8515 0.8606
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