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USDCAD Short Scalps Face 1.2300 Hurdle Ahead of CPI

USDCAD Short Scalps Face 1.2300 Hurdle Ahead of CPI

Michael Boutros, Strategist

Talking Points

  • USDCAD attempting break of multi-month range lows / consolidation
  • Key interim support 1.23- Short scalp bias favored sub-1.2443
  • Event Risk on TapThisWeek

USD/CAD Daily

USDCAD Short Scalps Face 1.2300 Hurdle Ahead of CPI

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • USDCAD breaks Weekly / Monthly OR lows – (bearish)
  • 1.23 handle key near-term support (bullish invalidation)
  • Support break targets objectives at 1.2190-1.22, 1.2095 & 1.1987
  • Resistance 1.2385 backed by key resistance at 1.2560 (bearish invalidation)
  • Daily RSI testing 40-support- break would reinforce downside bias
  • Pending resistance trigger- breach would validate shift focus
  • Event Risk Ahead: Canadian CPI & Retail Sales & US CPI & University of Michigan Sentiment Surveys on Friday

USD/CAD 30min

USDCAD Short Scalps Face 1.2300 Hurdle Ahead of CPI

Notes:A break of the weekly opening range low / median-line support was accompanied by a support trigger break in momentum early today with the decline now challenging key near-term support at the 1.23-handle. Note that today’s decline marks the second largest one-day decline since June of 2012, surpassed only by the March 18th sell-off, which was the day the 2015 high was registered at 1.2833.

Although our scalp bias remains weighted to the short-side while below 1.2444, daily momentum is now approaching 40 with the intraday RSI profile still holding sub-30. A risk for a near-term rebound here has us off the short-side for now, but bottom line: looking to sell rallies sub-1.2444 with a break of the lows targeting soft support at 1.22 & the 1.618% Fibonacci extension at 1.2095. A breach above 1.2444 puts us neutral with key resistance (bearish invalidation) eyed at 1.2560. A quarter of the daily ATR yields profit targets of 25-27pips per scalp. Caution is warranted heading into event risk on Friday with the US &Canadian Consumer Price Index (CPI) data likely to fuel added volatility in the respective crosses.

* 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.

Relevant Data Releases

USDCAD Short Scalps Face 1.2300 Hurdle Ahead of CPI

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

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