Bounce or break?
USD/CAD and GBP/NZD are currently testing support zones on their hourly charts.
Will buyers return soon?
GBP/NZD: 1-hour
Let’s start off with this trend channel play on the 1-hour chart of GBP/NZD.
The pair is in the middle of a correction and is down to the mid-channel area of interest. Now this happens to be right smack in line with the 38.2% Fibonacci retracement level at the 1.9650 minor psychological mark.
If this is enough to attract strong buying pressure, price could resume the climb to the swing high near the 1.9800 handle and channel resistance.
A larger correction could still reach the 50% Fib closer to the 1.9600 major psychological level or the 61.8% retracement near 1.9550. The line in the sand for an uptrend pullback would be the channel bottom at the 1.9500 handle.
The 100 SMA is above the 200 SMA to indicate that the rally is more likely to resume than to reverse, but Stochastic seems undecided on its move up from the oversold area.
USD/CAD: 1-hour
See those lower highs and support at the 1.3670 area on USD/CAD?
Why, that’s a neat descending triangle pattern right there!
The pair is testing the triangle bottom, still deciding whether to bounce back to the resistance around 1.3725 or go for a breakdown.
Stochastic is pointing down from the overbought region to hint that bearish momentum is about to pick up. The oscillator has plenty of room to move south before reflecting exhaustion among sellers.
Plus, the 100 SMA is below the 200 SMA to suggest that support is more likely to break than to hold. These moving averages are also near the triangle top to add to its strength as a ceiling.
If USD/CAD does close below the triangle support, price could tumble by the same height as the chart pattern. This spans roughly 200 pips, so don’t miss it when it happens!
