December 28, 2021

Longer-term Setups on CAD/JPY & EUR/NZD

 Who’s ready for longer-term technical setups to close out the year?


With no major events expected this week as we close out out 2021, here are a couple of trend setups on currency crosses to throw on the watchlist for 2022!


CAD/JPY: Daily

It’s been quite a dip for CAD/JPY bulls since the pair topped out around 93.00, falling roughly -5.75% to its lows just under the 88.00 handle in December.



But by the looks of that double bottom pattern forming around the 88.00 handle and the market steadily moving higher in this new week, it looks like that bullish divergence between price and stochastic may be confirmed.

Unless we get some sort of broad risk reversal to negative this week, this setup is likely to draw in technical bulls once again looking to play the longer-term uptrend. And if that scenario does play out, then watch out for bullish reversal patterns once again around 88.00 before considering a long position.


And if the markets continue higher,  there is one more hurdle that bulls will have to overcome before the odds rise significantly that the uptrend will resume, and that’s the falling trendline marking the lower ‘highs’ pattern. It’s been a strong magnet for bears this past month, so a break there could be the catalyst for a fresh momentum move higher.


EUR/NZD: Daily

EUR/NZD saw a burst of bullish behavior over the last month after breaking out of the tight consolidation pattern between 1.6100 – 1.6300 earlier this month.


Congrats if you were a bull that caught that fast move higher, but the market is back to retesting the falling ‘highs’ pattern that have kept the bulls in check going back to July.



We can also see that this area between 1.6700 – 1.6800was a very strong area of interest in 2021, being mainly a major support area for the first half of the year before breaking in August.


And on top of that, this area also lines up with the falling 100/200 simple moving averages, strengthening the technical argument that this area will likely draw in technical bears.


But with the end of the year fast approaching and no major events listed this week, it’s likely we’ll continue to see volatility decline into 2022. That makes a downside consolidation break the pattern to watch before considering a short position on EUR/NZD, or for the more conservative types, a retest and bearish reversal patterns of the 1.6800 handle before thinking about putting on sell orders.