NZD/CAD 4H Chart: Rising Wedge

The New Zealand Dollar has been consistently outperforming its Canadian counterpart since last year's September, soon after hitting a rock bottom at the level of 0.80. However, considering that NZD/USD is forming a rising wedge, there are now concerns that the rally may be overstretched. A breach of the lower boundary of the pattern, namely the rising support line at 0.9458, is therefore likely to entail a precipitous decline. In this case the currency pair will be expected to target 0.9248 (weekly S3 and 200-period SMA). At the same time the market is explicitly bearish towards the kiwi—only 25% of positions are long and the remaining 75% are short.