NZD/CAD 1H Chart: Reverse Head and Shoulders

Source: Dukascopy Bank SA
© Dukascopy Bank SA
While and ascending channel has proven to have decent strength, it is unlikely that NZD/CAD will manage to complete its path towards the upper trend-line 0.9609 as the two and a half year resistance will provide enough supply to cause a selloff. The level will be proven as the neckline of a reverse head and shoulders pattern in case it is broken. We, however, expect the price to dip to circa 0.9492 where it will struggle with the 200-hour SMA which has limited the pair's movements countless times before, and is expected to put up a battle in the future as well. Multi-year support lies at 0.8708 it is unlikely to be broken in 2016. If the price does break the strong resistance level, however, a further movement inside the bounds of the channel can be expected with the top trend-line being the next target at 0.9615. Proving this scenario to have decent credibility as well, aggregate technical indicators suggest a bullish market in the future and a 20 percent net sentiment index just adds fuel to the fire.
© Dukascopy Bank SA
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