NZDCAD Analysis: Bearish Chart Patterns
The Weekly timeframe is examined in today’s NZDCAD analysis. The main purpose for analysis is to examine and explore chart patterns and their implications for the long term price development in the NZDCAD.
Price peak in the week of December 28, 2015 is used as the left shoulder (LS) of a head and shoulders top pattern in the NZD CAD. Price levels and /or pivot used for the rest of the pattern (i.e. Head, right shoulder and neckline) are 0.99253, 0.95187 and 0.86540 respectively.
The bearish implication conveyed by the chart pattern was confirmed in the week of August 06, 2018 with price closing below the neckline.
Another pattern for consideration on the weekly timeframe of the NZD CAD is a descending triangle. The neckline of the head and shoulders pattern is used as the base or lower boundary of the descending triangle, while the downward sloping line (upper boundary) of the chart pattern is as highlighted on the chart.
Even though price did resume a bullish swing after confirmation, the use of the Head and shoulders pattern is still valid until price breaches 0.99523 (head of the pattern). The width of the pattern is also shown on the chart and is measured from the head to the neckline. Projection of the width below the neckline helps to provide the minimum estimate for price in this bearish scenario.
Same principle can be applied in the case of the descending triangle with the use of the width. Even though both patterns ideally have bearish implications, it is important to understand and monitor the current trend for a suitable price point to be bearish (sell) and also points of invalidation for any trade(s).
Price peak in the week of December 28, 2015 is used as the left shoulder (LS) of a head and shoulders top pattern in the NZD CAD. Price levels and /or pivot used for the rest of the pattern (i.e. Head, right shoulder and neckline) are 0.99253, 0.95187 and 0.86540 respectively.
The bearish implication conveyed by the chart pattern was confirmed in the week of August 06, 2018 with price closing below the neckline.
Another pattern for consideration on the weekly timeframe of the NZD CAD is a descending triangle. The neckline of the head and shoulders pattern is used as the base or lower boundary of the descending triangle, while the downward sloping line (upper boundary) of the chart pattern is as highlighted on the chart.
Even though price did resume a bullish swing after confirmation, the use of the Head and shoulders pattern is still valid until price breaches 0.99523 (head of the pattern). The width of the pattern is also shown on the chart and is measured from the head to the neckline. Projection of the width below the neckline helps to provide the minimum estimate for price in this bearish scenario.
Same principle can be applied in the case of the descending triangle with the use of the width. Even though both patterns ideally have bearish implications, it is important to understand and monitor the current trend for a suitable price point to be bearish (sell) and also points of invalidation for any trade(s).
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