USD/CAD: Bears target 1.3100 as next level of support
Good afternoon Traders and welcome back to the EverythingFX Mayfair HQ.
The US Dollar currently trading at 1.32771 against the Canadian Dollar during today's London session.
Starting on a weekly timeframe we can see we had a massive release of pressure where the price was trapped in about a 120 PIP consolidation in between 1.34000 and 1.35000/1.35200. We had a massive bearish engulfing on a weekly engulfing 13 trading weeks. Which is a strong indication of a shift in momentum.
Dropping down to a daily we can see the price has successfully broken back below our ascending trendline which has extended all the way from 2017. Furthermore, let's go down to a 4-hour timeframe we can see price is currently going sideways where I do expect a retracement before going lower. There are two levels of minor resistance where we could potentially pop back up to re-test. We have the trendline which would be textbook to get a nice clean re-test and there is also 1.33000 which lines up nicely with a trendline re-test, or we could get re-test of 1.34000 would be great as it increases the risk to reward to the downside. Next level of support which evidently would be our first target of 1.31000 which provides us with a great 200/300 pip move upon a re-test of the two levels discussed above. What would invalidate this bias right now is a break of 1.35200.
Fundamentally we had NFP coming out on Friday with a shocking 75k versus a consensus of 185k which is dollar negative as well as Canadian unemployment getting better with a figure of 5.4% vs a consensus of 5.7% so that's a good indication that the Canadian economy is getting better! We have Building permits and Housing starts coming out for Canada later today as well as US PPI and CPI later on in the week which will set the tone for the pair. Eyes still on OPEC for what their next move will be. Stay tuned to our Market news section, Twitter feed and Instagram page for further updates.