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USDCAD Levels to Know Ahead of BoC - 1.3335 Marks Critical Resistance

USDCAD Levels to Know Ahead of BoC - 1.3335 Marks Critical Resistance

Michael Boutros, Strategist

Talking Points

USDCAD Daily

USDCAD Levels to Know Ahead of BoC - 1.3335 Marks Critical Resistance

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • USDCAD monthly opening range in focus ahead of BoC
  • Interim support 1.3138 (monthly open) backed by 1.3063 (bullish invalidation)
  • Resistance at 1.3288 (reversal-day close) backed by 1.3335 (HDC) (bearish invalidation)
  • Daily RSI in consolidation – Divergence into the highs- bearish
  • Pending momentum support / resistance triggers in play
  • Key Event Risk Ahead: Bank of Canada Rate Decision tomorrow & U.S. University of Michigan Confidence on Friday

USDCAD 30min

USDCAD Levels to Know Ahead of BoC - 1.3335 Marks Critical Resistance

Notes: Loonie is carving out a well-defined monthly opening range heading into tomorrow’s Bank of Canada interest rate decision. Divergence into the highs alongside the recent rebound in crude prices puts the long-side at risk near-term with resistance seen at the August 26th daily reversal-close backed by our bearish invalidation level at the 2015 high-day close at 1.3335. A breach above this level is needed to keep the long bias in play targeting 1.34 & the key 61.8% retracement of the 2002 decline at 1.3457.

Soft support rests at 1.3170 with a break below the monthly open at 1.3138 shifting the focus to the downside targeting 1.3104 & confluence support into 1.3064. Note that a quarter of the daily average true range (ATR) yields profit targets of 34-36 pips per scalp. Caution is warranted heading into the BoC with the release likely to fuel added volatility in the CAD crosses. We’ll be closely eyeing crude prices with a hold above 42.15 (march lows & 61.8% retracement of August advance) further supporting the case for some pullback of some magnitude in USDCAD.

For updates on this scalp and more setups throughout the week subscribe to SB Trade Desk

Relevant Data Releases

USDCAD Levels to Know Ahead of BoC - 1.3335 Marks Critical Resistance

Other Setups in Play:

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

Follow Michaelon Twitter @MBForex, contact him at mboutros@dailyfx.com or Click Here to be added to his email distribution list

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