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USDCAD Risks Reversal Ahead of NFPs- 1.0950 Key Resistance

USDCAD Risks Reversal Ahead of NFPs- 1.0950 Key Resistance

Michael Boutros, Strategist

Talking Points

  • USDCAD breakout now at interim resistance
  • Risk of near-term reversal heading into close of week
  • Major Event Risk on tap from US & Canada

USDCAD Daily Chart

USDCAD Risks Reversal Ahead of NFPs- 1.0950 Key Resistance

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • USDCAD testing near-term resistance 1.0943/50
  • Breach targets topside resistance objectives at 1.0990, 1.1028/45- bearish invalidation
  • Interim support at former trendline resistance, 1.0851/60- bullish invalidation
  • Daily RSI break above multi-month resistance trigger / 50 breach - bullish
  • Major Event Risk Ahead: US Non-farm Payrolls & Canadian Employment on Friday morning

USDCAD Scalp Chart

USDCAD Risks Reversal Ahead of NFPs- 1.0950 Key Resistance

Notes: A rally back above 1.0860 early in the week and a clean break of the weekly opening range high at 1.09 on Tuesday shifted our scalp bias to the topside for the USDCAD. However the pair is now testing a key resistance range ahead of major event risk this week with intra-day RSI divergence at the highs warning of possible near-term exhaustion.

Bottom line: although the broader outlook is weighted to the topside, our immediate focus is against the 1.0950/60 resistance zone with the one-two NFP/Canadian Employment punch on Friday likely to offer a catalyst for either a correction lower or a definitive breach and continuation through 1.0960. Keep in mind we are just putting in the June opening range and our base-case scenario is for a near-term pullback in the greenback heading into the start of the month. Follow the progress of this trade setup and more throughout the trading week with DailyFX on Demand.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Technical Relevance

Bearish Invalidation

Daily / 30min

1.0942/60

100% Ext / 61.8% Retracement

Break Target 1

Daily / 30min

1.0990 – 1.10

38.2% & 78.6% Retracement(s)

Break Target 2

Daily / 30min

1.1028/45

1.618% Ext / 50% Retrace / April Highs

Break Target 3

Daily

1.1100

61.8% Retracement

Break Target 4

Daily

1.1167/78

78.6% Retracement / January Close High

Support Target 1

30min

1.0923

23.6% Retracement

Bullish Invalidation

30min

1.0903

38.2% Retrace / Weekly ORH

Break Target 1

30min

1.0887

50% Retracement

Break Target 2

30min

1.09870

61.8% Retracement

Break Target 3

Daily

1.0851/59

38.2% & 61.8% Retrace(s) / April Low

Break Target 4

30min

1.0831/36

61.8% & 88.6% Retrace(s) / Weekly ORL

Break Target 5

Daily

1.0792

61.8% Extension

Average True Range

Daily (20)

49

Profit Targets 13-15pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars Thursday this week on DailyFX Plus (Exclusive of Live Clients) at 15:30 GMT (11:30ET)

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