NZDCAD: Testing Long-Term Resistance Amid Flag Pattern
05 May 2023
The technical analysis on Friday will feature an exotic instrument - NZDCAD. The price is currently at an important long-term resistance level, and the trading signal for the coming days and weeks depends on what happens here.
The fourth quarter of the previous year was amazing for NZDCAD. From the middle of October until the middle of December, the pair rose almost 1200 pips. 2023 brought us a correction of this rise, which has formed a very handsome flag pattern (black). Whenever I see flags like this, it amazes me how accurate technical analysis can be. These two lines are parallel and have effectively restricted trading for the past five months.
Today, the price is testing the upper line of this flag once again. So far, the test looks positive for sellers as the price is creating a shooting star candle. How should we trade this? Well, the flag is a trend continuation pattern, which promotes a breakout to the upside. Remember that a price breaking and closing a day above the upper black line will be an amazing signal to go long. The shooting star created today can be a promising signal for a mid-term bearish correction, but let's wait and see how this day ends.