NZDCAD Long-Term Buy Framework
Diupdate
This is a bullish setup framework for a lesser traded pair. Please read the 'guidance' below for full value.
There tends to be a lot of volatility for this pair in Nov & Dec. Based on VaR analysis, there is a decent probability of a 250+ pip bullish move over that period. And, CAD macro data has been very strong for a bit too long, so any miss in upcoming data will see a surprise trend as commercials will try to cash in against speculators. Essentially, CAD has been 'wanting to weaken' since July, but data upside surprise keeps it on life support. But fair warning: do keep in mind that Options, Futures, and COT data all suggest NZD weakness and CAD strength, so I wouldn't expect any NZDCAD bullish moves to last into next year (without changes in that data at least).
I attached rough estimates for levels that will be hit at some point in the next month or so. Generally, it is unwise to forecast technical setups for this kind of horizon. There are too many geopolitical and fundamental variables to interfere with at this kind of scale, but because both currencies are attached to commodities, global trade issues, and the Chinese economy to some degree, they are not as vulnerable as something like the USDJPY or XAUUSD, for instance, which have clear 'risk on vs risk off' parameters.
Small lots with large SLs and low account risk can make these fun experiments from time to time.
There tends to be a lot of volatility for this pair in Nov & Dec. Based on VaR analysis, there is a decent probability of a 250+ pip bullish move over that period. And, CAD macro data has been very strong for a bit too long, so any miss in upcoming data will see a surprise trend as commercials will try to cash in against speculators. Essentially, CAD has been 'wanting to weaken' since July, but data upside surprise keeps it on life support. But fair warning: do keep in mind that Options, Futures, and COT data all suggest NZD weakness and CAD strength, so I wouldn't expect any NZDCAD bullish moves to last into next year (without changes in that data at least).
I attached rough estimates for levels that will be hit at some point in the next month or so. Generally, it is unwise to forecast technical setups for this kind of horizon. There are too many geopolitical and fundamental variables to interfere with at this kind of scale, but because both currencies are attached to commodities, global trade issues, and the Chinese economy to some degree, they are not as vulnerable as something like the USDJPY or XAUUSD, for instance, which have clear 'risk on vs risk off' parameters.
Small lots with large SLs and low account risk can make these fun experiments from time to time.
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