NEWS / Foreign Exchange

The Year of the '2B Bottom' (part 1 of 2)

In an article published here on January 24th I deconstructed a '2B bottom' scenario applied to the price action of the Yen versus the US Dollar apparently in development since December 2005. I reviewed the same theme this week on Tuesday and Wednesday.

Last year, though, in my view the Canadian Dollar had been the most interesting of the major currencies. Mostly because of the Canadian Dollar, 2006 as well could have been labelled the year of the '2B bottom'.

Momentum traders may feel attracted to the current, short-term developments of the EUR/CAD - but this pair's uptrend, not yet invalidated, happened to be triggered by a '2B bottom' confirmed in early March last year (weekly chart). Since back then, the EUR/CAD has been able to appreciate for about 2,000 pips.
Price action that could have been interpreted as a '2B bottom' became visible in the AUD/CAD in June last year (weekly chart), since then the pair has managed a 1,000-pip appreciation. The GBP/CAD's uptrend last year emerged in March, again on behalf of a '2B bottom', that has resulted in a multi-month, multi-thousand-pip appreciation.

Last year the day of May 31st proved as a remarkable point of price inflection in the major USD/CAD market - once again, a '2B bottom' was involved.
Just a few weeks in the afterwards, in late June the bullish reversal of the NZD/USD took the shape of perhaps one of the most clear '2B bottoms' I have ever experienced. Meaning, one of the most intriguing chart patterns I know making its appearance in two different USD-based markets at approximately the same time of the year - hinting not only at a possible appreciation of the directly corresponding markets i.e. the USD/CAD and the NZD/USD, but also at an all the more sizable rebound of the New Zealand Dollar against the Canadian Dollar.
Since late May last year, the USD/CAD has managed a multi-hundred-pip recovery. Since July last year, the NZD/CAD has seen a multi-thousand-pip rebound.