Both USD/CAD and GBP/NZD have pulled back from their established downtrends.
Are we looking at retracements or the start of longer-term reversals?
Check out these charts and lemme know what you think!
GBP/NZD: 4-hour
GBP/NZD has been on a downtrend since early October but it looks like the bears are struggling with their momentum lately.
Sure the pound is still trading below a descending trend line and the 100 SMA on the 4-hour time frame but a possible Reverse Head and Shoulders pattern tells us that the selling may be running out of steam.
Look out for a break above the 100 SMA and the trend line we’ve marked as it could lead to a test of the 1.9250 previous resistance or even the 200 SMA.
If you see the pound get rejected at the 100 SMA, though, then you can probably trade with the overall trend and price in a dip back to November’s lows.
USD/CAD: Daily
Are you seeing what I’m seeing? USD/CAD just saw a moving average crossover on the daily!
Does this mean that USD/CAD is ready for a reversal? The pair is trading inside what looks like an ascending channel after finding support from the 1.2050 zone earlier this year.
Of course, we could also be seeing a bearish flag pattern that would extend USD/CAD’s longer-term downtrend.
Dollar bulls can take advantage of the current momentum and price in a jump to the 1.2850 previous highs or even new 2021 highs for the pair.
If you think that we’re just seeing a pullback, however, then you can also design trading plans around a downside breakout that would retest 2021’s lows.
Whichever bias you end up trading, make sure to use your best risk management moves so you can minimize your risks and maximize your losses!
