This Setup Is Getting Close To Being Triggered…
In
Wednesday’s column, I had mentioned that I was keen on
shorting NZD/CAD based on technical and macro reasons. Thursday’s
price action left me wondering if in fact a trade would not develop; however,
based on Friday’s action, I believe there is still a good chance that .8000
could be tested in the weeks to come.
There are a few technical reasons to believe that
this is the case and whenever you trade a currency cross, it is essential that
you look at each individual currency versus it’s predominant pairing, typically
the dollar. In this case a nice technical break in USD/CAD points to further
strength in CAD going forward – this has begun to show up in the price action in
NZD/CAD late Thursday and into Friday. So while NZD/USD has remained well bid,
I see the strength in CAD as an overiding factor going forward.
As always, feel free to send me your comments and
questions.
Dave Floyd is
President of Aspen Trading Group, which provides research/trade ideas on the FX
and equity markets as well as analytical software. Aspen Trading Group is based
in Bend, OR.