Our forex strategies had an incredibly effective week with four directional biases and technical setups that generally work as discussed. check it out!
Week setup in forex: simple US dollars / Canadian dollars Playing in range before BOC decision
Forex USD/CAD for 4 hours Planned by TV
On Monday, we spotted this textbook range setup on USD/CAD, which could quickly see volatility ahead with two major events out of Canada this week.
We didn’t take a strong directional bias, but we did discuss both bullish and bearish price scenarios to watch out for based on the outcome of the BoC’s upcoming monetary policy and interest rate statement.
Well, the Canadian dollar bulls seem to have dominated thanks to a surprise rate hike from the Bank of Canada on Wednesday, and the continuation of the downward move from the top of the range that started in May.
The downside scenario that we discussed was a break of the downside support, which didn’t happen, but there was definitely an opportunity to pick up some pips on the move, both after our posting and after the BoC event.
Canadian dollar / Japanese yen: Tue – 5 Jun 2023
CAD/JPY Daily Forex Planned by TV
On Tuesday, we decided to put CAD/JPY on the watchlist as it pulled back from a strong rally to start the month of June.
We had a bullish bias because from a chart standpoint, there was plenty of argument to attract technical buyers, including a retest of a price area that included Fibonacci, a higher swing high and a higher 100/200 SMA (roughly between 103.00 – 103.65).
The catalyst for a possible return to the rally was the upcoming Ivy PMI data and the Bank of Canada interest rate decision, the latter of which probably has the most potential to send the Canadian dollar higher with the potential for a rate hike.
Well, it looks like technical and fundamental traders were coming in ahead of the BOC event, holding the strong area of interest above around 103.50, and with the surprise rate hike from the BOC, the pair snapped to retest the 105.00 handle roughly by the middle of the week before settling around current prices around 104.50 before closing the week.
Australian dollar / Swiss franc: Tue – Jun 2023
AUD/CHF hourly currency pair Planned by TV
On Tuesday, we spotted a short-term setup in AUD/CHF, and we look forward to a longer-term setup if the pair gives up some of the immediate gains triggered by the RBA’s rate hike announcement earlier in the session.
On the 15-minute chart, we spotted a pattern/setup that could attract technical traders (retest of the consolidation area around 0.6000 – 0.6010), as well as money traders looking to play the RBA event at a better price.
We also believe that another upward move could be in the future with fresh catalysts from RBA Governor Lowe’s speech, as well as the GDP reading coming out of Australia. Tight comments from Lowe and/or a better-than-expected GDP reading may keep traders on the upside this week.
Well, it looks like we hit the trend and the turning point nicely, but our timing was off as it mostly stayed to the side, likely due to Australian traders balancing between the RBA’s hawkish events and net negative economic updates out of Australia this week.
But AUD/CHF finally pulled back on Thursday and hit the support zone discussed on Friday, as the market placed a bid bid and moved quickly higher, likely riding the broad risk sentiment in the market into the weekend.
New Zealand dollar / Canadian dollar: Wed – Jun 2023
Forex NZD/CAD for 2 hours Planned by TV
Wednesday was the big day for CAD traders as the Bank of Canada is due to make its final monetary policy decision, and we thought the descending triangle pattern on NZD/CAD was a solid setup to watch should we see upward movement in the session.
Aside from setting up the consolidation break in the 1-hour chart textbook, with the RBNZ hinting at a forward pause, it would make sense for the fundamentals to watch the pair for a bearish move if the BOC breaks out with at least a “hawk-hold” tone. .
Well, they did more than that as previously mentioned, raising interest rates another 25 basis points to 4.75% and astonishing most of the market (we actually thought this scenario was a real possibility in our event guide). a
And as discussed in our event guide, this scenario triggered a very bullish reaction from traders to lift the Canadian dollar into the lead on the session against major forex currencies, including NZD/CAD.
Not only did we see the support area of the triangle break quickly, but the NZD/CAD moved more than ATR daily to the downside, giving the NZD/CAD bulls an opportunity to make quick pips from this strong technical and fundamental setup.
Unfortunately for those looking for an extended swing move, the NZD/CAD reversed course as the NZD recovered broadly (most likely due to positive Chinese banking news) while the CAD fell broadly along with oil prices on Thursday.
Australian dollar / Canadian dollar: Thursday – 8th June 2023
Forex AUD/CAD for 2 hours Planned by TV
On Thursday, we saw that the AUD/CAD fell like a rock after the sudden rate hike from the Central Bank of Canada, taking the pair to the bottom of the ascending channel and the 100/200 SMA.
We thought the bulls might regain control after the news hit the wires Chinese banks cut deposit rates, which can drive capital back into the domestic and global economy and stimulate growth. Given that the Australian dollar often trades in correlation with Chinese news/data, we thought this could also lift AUD/CAD.
From a price action point of view, there were many arguments to attract technical buyers. This was mainly the area where the SMA, Fibonacci, and the bullish channel pattern/bottom converged.
And that seemed to be how the AUD/CAD played, quickly finding supply and returning to the top of the ascending channel, again, helped by positive Chinese news, but also potentially on the aforementioned CAD weakness and arguably broad risk sentiment. Turn positive before the weekend.