NZDCAD has recently broken above a long-term double bottom formation, indicating that an uptrend is underway. 

Price is currently moving inside a rising channel on its 1-hour chart and is testing the support near the .8900 major psychological level.

A bounce off this area could spur a move until the top of the channel at the .9100-.9150 levels. Stochastic is pointing up, hinting that buyers are still in control of price action, while RSI is on middle ground and barely offering any strong directional clues at the moment.

A break below the channel support could mark the start of a downtrend, possibly taking price down to the next visible floor around the .8700 major psychological mark. Increased selling pressure could spur a move to the yearly lows at .8300.

Event risks for this trade setup include the quarterly jobs release from New Zealand, which is expected to show a 0.4% increase in hiring and a climb in the jobless rate from 5.9% to 6.0% for Q3. 

Canada is also set to release its monthly employment report by the end of the week and might show another downbeat jobs figure. If so, NZDCAD might be able to keep up its rally for much longer.

Other potential risks include the RBA statement on Tuesday, with some analysts expecting to see an interest rate cut weigh on the Aussie and Kiwi. Inflationary pressures have weakened in Australia while the top banks have already adjusted mortgage rates to give the central bank room for potential easing.

By Kate Curtis from Trader’s Way