Breaking News
0

USD/CAD Bears Pause For Breath Below Resistance

By Faraday Research (Matt Simpson)ForexApr 16, 2018 05:28AM ET
www.investing.com/analysis/usdcad-bears-pause-for-breath-below-resistance-200305706
USD/CAD Bears Pause For Breath Below Resistance
By Faraday Research (Matt Simpson)   |  Apr 16, 2018 05:28AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

In a previous post, we highlighted the tendency for USD/CAD to trade lower throughout April using a 10 year seasonal chart. Just over half way through the month and already 2.2% lower, it appears on track to maintain this pattern.

NET USD Positioning
NET USD Positioning

Also helping its cause is the fact that, as of last Tuesday at least, markets were net short the USD at levels not seen since 2011. Whilst it raises the potential that short USD could become an overcrowded trade, it at least demonstrates the bearish sentiment towards the Greenback now. Couple this with USD/CAD’s bearish seasonal pattern and technical analysis, we could be sat on a high probability setup for a short.

The head and shoulders pattern on USD/CAD’s daily chart is not too far from hitting its initial target. If we project the target using the 1.3124 head and 1.2800 as the neckline, the target lands near the 1.2450 lows. Being a key structural level it makes the area a viable target for bears, but that’s not to say we an eventual break beneath is out of the question either.

USD/CAD Daily Chart
USD/CAD Daily Chart

Momentum on the daily chart has been predominantly bearish since the 1.3124 high, and retracements have been minor between three clear phases of bearish range expansion. Now compressing near recent lows, we’re seeking a break of the 1.2543 low before entering. If momentum decides to break above 1.2629 (above recent compression candles), we’d prefer to step aside until bearish momentum returns.

However we also note it remains within a wide bullish channel. Although its bullish trajectory is hardly setting the world alight, the lower channel could provide support so is a worthy technical area to monitor as price action develops.

The Bank of Canada hold their monetary policy meeting on Wednesday. Whist the consensus expects them to hold, any hawkish clues for their next hike could see CAD crosses broadly strengthen. And if such clues are not apparent, CAD crosses could just as easily sell-off too. So be on the lookout for bouts of volatility surrounding the meeting but, if the technical picture allows for a short, let price action be your guide

Original Post

USD/CAD Bears Pause For Breath Below Resistance
 
USD/CAD Bears Pause For Breath Below Resistance

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email