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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


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

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

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

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