USD/CAD: Is It Time For the Correction?
Good afternoon traders!
Hope everyone had a lovely weekend and managed to make the most of the analysis we provided last week on Today's Technicals! We managed to provide over 810 PIPs combined as a team last week alone and aim to beat that this week! Let's get straight into it!
I’m looking forward to this week as there is a lot happening in the markets, providing us with some extra volatility and some interesting setups. USD/CAD is currently trading at 1.3420 after a heavy push in the pair last week which was from the weak GDP data and also the BoC pushing rate hikes back further. We did see a slight drop in the pair from the weak US NFP data at the end of last week.
Price is hovering around the all-important 1.3400 Monthly resistance. The price is currently holding firm above the resistance, turning this into some support but I believe we are overextended and overbought, leading me to think the price will decline over the first part of this week.
The monthly time frame still suggests that price will push higher but I would like to see a strong clear out of the monthly resistance before looking for further longs into the weekly resistance.
Moving over to the weekly time frame, we had price push past monthly resistance and then a pull back into the highlighted zone which shows me there are sellers at this area. If we blew straight through the monthly resistance and closed above the highlighted region I would only be looking for longs but as we have been quite indecisive at this area price looks like it needs to decline.
The daily time frame also suggests a downward movement after a bearish engulfing candle last Friday, and what looks to be a three pin pattern formed adding confluence to the short trade. We are also at an all-important daily fib region 1.3440 which price clearly rejected last Friday. A higher-low needs to form on the daily time frame before price reloads to go higher.
Looking into the 4H timeframe I see a nice entry where there has been a lot of wicking action, showing price does not like being in the area, shown by the horizontal blue line. If price reaches here it will also represent a right shoulder to a head and shoulders pattern. The risk to reward on this trade is very inviting as my first target will be 1.3320.
However, my analysis will be invalidated if we have a daily bull closure above the blue line showing that the sellers have been cleared out and I will have to analyse the pair again and look for a different entry.