NZD/CAD was trading within an upside channel from July 10th until yesterday, when it slid below the lower end. The tumble continued thereafter, with the rate falling below the 0.8822 support, thereby completing a non-failure swing top pattern. Thus, having all these technical signs in mind, we would consider the short-term bias to have turned negative for now.
At the time of writing, the rate is hovering slightly above the 0.8790 hurdle, which if broken may allow the bears to drive the battle towards the 0.8760 zone, a support marked by an intraday swing low formed on July 18th. Another break, below 0.8760, could carry more bearish implications, perhaps paving the way towards the low of July 16th, at around 0.8734.
That said, before the next leg south, we see the case for a corrective bounce, perhaps for NZD/CAD to test the 0.8822 area as a resistance this time. We base our view on our short-term oscillators. The RSI, although below 50, has bottomed somewhat, while the MACD has just turned negative, but its latest slide shows signs of slowing down. It could also bottom soon.
On the upside, we would like to see a decisive break above 0.8890 before we start examining whether the outlook has turned back positive. Such a move would confirm a forthcoming higher high on both the 4-hour and daily charts and may pave the way towards the peak of June 5th, at around 0.8920. If the bulls do not stop there either, then we may see them targeting the 0.8937 territory, which is fractionally below the peak of May 6th, and marks the high of May 1st.
